Thursday, November 15, 2018

Jet Airways deal: Singapore Airlines also in the fray in talks between Naresh Goyal, Tatas

Although Jet Airways has consistently dismissed the buzz about a stake sale to the Tata Group as speculative, talks are reportedly picking up pace and a two-step transaction is being hashed out.

The cash-strapped airline could merge with Tata SIA Airlines Ltd - the joint venture between Tatas and Singapore Airlines that's known by the brand name Vistara - through a share swap in the first phase. Jet promoter Naresh Goyal, his partner Etihad, Tata Sons and Singapore Airlines will then all become partners in the new company, The Economic Times reported.

In the second step of the deal, Singapore Airlines could buy out the Goyal family's entire 51% stake in the new combined entity.

While Etihad may choose to continue with the venture as minority shareholder (it holds a 24% stake), it will have an exit option too.

"If Etihad needs an exit, we are ready to buy them out as well. Eventually, Tatas and Singapore Airlines will control the entity," a person with direct knowledge of the development told the daily.

Media reports earlier this week suggested that the Tata Group had already started its due diligence process in order to pick up a controlling stake in Jet Airways, which recently reported its third consecutive quarterly losses for the quarter ending September.

"The attempt is to work out a way where there would not be substantial cash payment involved in the buyout," a second source told the daily.

"Tata Sons chairman N Chandrasekaran is keen that a deal is quickly worked out that will strengthen the group's position in the aviation business and give it a much needed heft. Since Air India deal is not easily possible and the GoAir deal with the Wadias won't happen, Jet is our best bet," he added.

Tata, along with its partner Singapore Airlines, are expected to infuse capital to enable the Jet-Vistara combine to function effectively.

The deal in the works, if successful, will give the Tata Group's aviation plans a much-needed boost as it will secure Jet's landing rights, routes and related infrastructure amenities.
15/11/18 Business Today