In November 2018, when Tata Sons Chairman N Chandrasekaran presented the board a proposal to buy into Jet Airways, he was cautioned not to rush into a deal.
Coming just a week after the holding company of the Tata Group had released a statement accepting that it was in 'preliminary talks' for a deal, the caution felt like a suggestion to keep away. The Tatas were not keen to board the flight as long as it had Naresh Goyal, its founder Chairman.
In the next few weeks, Tata Group seemed to have lost interest in buying the distressed airline and attention shifted to Jet Airways' attempt to raise money from partner Etihad Airways.
But in less than four months, the caution may have probably resulted in the right opportunity for India's oldest conglomerate to finally make the decisive moment in achieving its aviation dreams.Taking stock
Jet Airways is in a precarious situation. Just about a third of its planes continue to fly, the rest are grounded
because of non-payment to lessors and for want of spare parts. Its pilots have threatened to go on strike from April 1
, if their three months' salary dues are not cleared. And if funds don't come by immediately, the airline may default - fourth time within three months - yet again.
Much of that urgent funding, part of the resolution plan prepared along with lenders was meant to come from Etihad Airways, which owns 24 percent stake. But the Abu Dhabi-based airline is now keen on exiting.
Goyal reached out to others, including Qatar Airways, but no one seems to be willing to invest.
With no immediate solution in sight to take off the Rs 8,000 crore debt pile off Jet Airways, its lenders have now taken up the onus to land the airline safely.
State Bank of India, the lead lender, has Jet Airways' lenders have worked out an alternate rescue plan for the debt-ridden airline that involves taking majority control and reconstituting the entire board of the country’s second largest carrier. With just 11 days left to the end of this financial year, lenders are in a rush to seal a resolution plan. They have asked promoter Naresh Goyal to step down immediately and make way for a new management. As per the plan, Goyal's stake will likely be capped at 10 percent by diluting the rest at a nominal value. "Nothing else is working out, so they (lenders) will take control and then once things stabilise, they will engage with the new investor," said a senior banking official, who did not wish to be named. "Any new investor will also be interested only when there is a change in management and stakeholders." While there are talks of new investors including Tata Sons being approached, another source said it will take at least a couple of months to bring them in, as regulatory norms require due diligence on the part of the lenders too asked Goyal to step down, will reconstitute its board and also bring in a long-term investor at a later stage. In return, banks are expected to inject some much needed cash into the airline.Contenders
Rumour mills have been working overtime on who that 'long term investor' could be.IndiGo
The Rahul Bhatia-airline, which is hoping to make a big international splash this year, would benefit from Jet Airways' expansive overseas operations. The Goyal-led airline flies to 20 countries and has a code share agreements with about 20 airlines.
But IndiGo would be saddled with Jet Airways' domestic presence, something that had put it off when it came to the Air India divestment too.
There was also buzz that SpiceJet could come in with a stake buy in Jet Airways. To the credit of Chairman Ajay Singh, the airline has turnaround impressively since it changed hands from Kalanithi Maran. But with a market capitalisation of about Rs 5,500 crore, can the airline chew its bigger peer that will come with a debt of Rs 8,000 crore?
And not to forget, acquisitions in India's airline industry haven't done well. Think of Kingfisher-Air Deccan, and Jet Airways continues to suffer because of its buy of Air Sahara in 2007.
Perhaps the banks could do with a strategic investor, like the kind of Yussuf Ali of Lulu Group. But Ali is not interested, and the banks would prefer an investor who could immediately take the controls at Jet Airways.History and ambition
The Tatas started India's first airline. Their ambition to re-enter the industry and start an airline in the 1990s didn't take off - some say Goyal had a role to play
The Group at present has a presence in the industry through two partnerships. The Tatas hold 51 percent in Vistara, its joint venture with Singapore Airlines, and also own 49 percent stake in AirAsia India.
The two airlines are relatively new in the market and need a push to garner market share, especially when IndiGo is adding capacity at a furious pace.
Jet Airways may fit in better with Vistara, given the latter's international ambition. Vistara is a full service airline, just like Jet Airways (it was at least until a few months ago when it introduced seats without frills).
Financially, Tatas won't have much of a problem taking over Jet Airways. "It won't be the first time that SBI would have gone to the Tatas when it needed bailing out," quipped a senior executive long associated with Tata Sons.
For the banks, the Tatas offer an option that will help them minimise haircut on their loan exposure to Jet Airways. And that is why they are keen to first change the leadership at Jet Airways before bringing in a long-term investor.