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Preliminary Discussions With Jet Airways On for a Deal, Confirms Tata

The Tatas have widely speculated to be planning to acquire Naresh Goyal-controlled airline with it's the Singaporean partner.


Updated:November 16, 2018, 11:48 PM IST
Preliminary Discussions With Jet Airways On for a Deal, Confirms Tata
Photo for representation only. (Image: Reuters)
Mumbai: Tata Sons Friday confirmed its interest in acquiring the beleaguered Jet Airways but said no concrete "proposal" has been made by the group so far.

The Tatas, which already run two carriers-- the full- service Vistara in a joint venture with Singapore Airlines (SIA) and AirAsia India in a similar arrangement with
Malaysian carrier Air Asia--have widely speculated to be planning to acquire Naresh Goyal-controlled airline with it's the Singaporean partner.

"Over the last few days there has been growing speculation about Tata's interest in Jet Airways. We would like to clarify that any such discussions (to acquire Jet
Airways) have been preliminary and no proposal has been made," Tata Sons said in a statement after a marathon five-hour board meeting at the headquarters here.

Addressing the analysts at the post-earnings concall,earlier this week, Jet Airways' deputy chief executive and chief financial officer Amit Agarwal had admitted that the
airline was in talks with "multiple interested parties" for fund infusion as well as stake in its loyalty progarmme Jet Privilege.

Besides Goyal,who along with his family owns 51 percent stake in the company, Gulf carrier Etihad Airways owns 24 percent in the cash-strapped airline which has been
delaying salaries and payments to vendors for many months now. Media reports suggest that the parent company of Vistara, Tata Sons-Singapore Airlines, is looking at an all- stock merger of Jet Airways as part of the Tata group's plans to board Goyal's full service carrier, which is grappling with cash crunch and mounting losses.

The airline earlier this week reported a net loss of Rs 1,261 crore in the September quarter against a profit of Rs 71 crore y-o-y, making it the third straight quarters of heavy losses.

The two sides are reportedly inching towards a two- step transaction that would first see Jet merging with Tata- SIA joint venture through a share swap to form a new JV,
which will have the Goyal family, Etihad, Tata Sons and Singapore Airlines as its partners. But a bone of contention is the Tatas' insistence on Goyal completely leaving the airline which he built 25 years ago.

However, in an exchange filing Thursday, Jet Airways described the media reports as speculative.

Reports also suggest in the eventuality of the Tata Group taking over Jet Airways, it might exit from AirAsia India, which has so far not been very aggressive in a market
that has been clipping at 20 percent on the back of a prolonged low-fare regime.

Jet, which along with its subsidiary JetLite flies 66 domestic and international destinations, has a combined fleet of 124 planes and enjoys 15.8 percent market share, while Vistara, which has a low 3.8 percent market share, on a fleet of 22 planes and flies to as many destinations.

On the other hand, AirAsia India accounts for just 4.4 percent of the total domestic passenger traffic with a fleet of 19 planes.

Besides, a merger of the two carriers will also allow Vistara will propel its plans to go international, which are currently reportedly stuck in the Rajiv Bhawan (which house civil aviation ministry) files.

Way back in 2008, the erstwhile Kingfisher Airlines had resorted to a similar move when it acquired the domestic low-cost pioneer Air Deccan to go international as it had not completed five years into domestic flying, which was mandatory for airlines at that time for overseas operations.

The merger talks have sent the Jet counter soaring over 40 percent in the past five trading sessions alone. It soared over 26.41 percent Thursday and rallied over 14 percent early Friday but closed with an over 8 percent gain at Rs 346.85 on the BSE, whose index jumped 0.56 percent.

There are also rumours that the Tatas are being nudged by government. However, government has denied that it is brokering the deal or asked has bankers to take a haircut on Jet debt to sweeten the deal.

"The aviation ministry is not involved in this process so far. Hence any question of haircut (by banks and other stakeholders like Airports Authority) etc does not arise," aviation secretary RN Choubey told PTI Thursday.
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