Thursday, October 18, 2018

Tata Sons in talks to pick up large stake in struggling Jet Airways; airline says it's 'speculative'

New Delhi: The Tata Group is eyeing a bigger slice of India's aviation pie. Citing sources aware of developments The Times of India reported that it has held preliminary talks to buy a large stake in the beleaguered Jet Airways. In fact, Tata Sons, the investment holding company of the $103-billion conglomerate, has sought management control and is interested in buying a 26% stake at least, which would trigger an open offer to buy an additional 26% from the airline's shareholders.

The Tata Group already owns stakes in two other airlines - AirAsia India, its joint venture with Malaysia's AirAsia Berhad, and Vistara, the joint venture between Tata Sons and Singapore Airlines, which directly competes with Jet Airways. So a deal with the latter would help the Tatas scale up in the aviation business, in terms of market share, network depth as well as fleet presence.

While a Jet Airways spokesperson reportedly said the news report was "totally speculative", there's no denying that such a deal could give the struggling airline a breather. The Naresh Goyal-founded airline has delayed salaries to pilots and is staring at payment defaults. Earlier this month rating agency ICRA downgraded its long-term borrowing programme.

Though both camps are exploring ways to take the discussions forward, contentious points like full management control and the future role of Jet Airways chairman Goyal, who owns a 51% shares along with his wife, could throw a spanner in the works. According to the daily, Jet Airways is keen on an equity collaboration. Previously, the beleaguered airline's talks with buyout investor TPG reportedly fell apart due to differences over controlling rights.
18/10/18 Business Today