Naresh Goyal’s Jet Airways is looking for an equity collaboration but Tata Sons seeks management control, according to a report.
Naresh Goyal’s Jet Airways, which has delayed the salaries of its pilots and may default on payments, is looking for an equity collaboration but Tata Sons seeks management control, according to the report.
However, a Jet Airways spokesperson told Financial Express that media reports saying that Tata Group held discussions to acquire a stake in the airline are totally speculative.
The $103-billion Tata Sons is already in the airline industry through joint ventures with Singapore Airlines which operates Vistara, and budget airline Air Asia. If the deal with Jet is successful, Tata can amp up their aviation business in terms of network and market share.
While both companies are trying to make the discussion successful, contentious points like full management control and the role of Jet chairman Goyal could make things difficult. The beleaguered airline had held one round of talks with buyout investor TPG, but it didn’t go through due to differences over controlling rights.
According to TOI’s report, the Tata Group would be interested to buy at least 26 percent in Jet, which would trigger an open offer of an additional 26 percent from Jet’s shareholders.
Abu Dhabi-based Etihad Airways, which holds a 24 percent stake in Jet Airways, made a $35 million “cash pre-purchase payment” to help out Jet Airways in financial troubles. However, Etihad Airways may sell a part or all of its stake in Jet Airways if the Tata Group comes into the picture, the report said.
Tata Sons chairman N Chandrasekaran may push the company’s aviation business through mergers and acquisitions. When Air India was put on the block by the government, Tata Sons had shown interest but didn’t go through with it finally.Tata Group is trying to overhaul its aviation business by bringing new leadership and additional funds in Air Asia and Vistara. There is speculation that former IndiGo president Aditya Ghosh may be brought in to head Tata’s aviation business.