Naresh Goyal changes Jet's stance, says he is open to Air India deal
19 May 2018
Jet Airways is not ruling out a stake purchase in loss-making national carrier Air India Ltd, its chairman Naresh Goyal has said, while adding that he remains focused on his own airline.
"We are looking at our own business,” Goyal told Bloomberg in an interview in Manchester, England. “But I am not saying that we will not look at Air India, I’ve never said that. Ultimately we will always see what is the best approach ahead of us, and for the country.”
Goyal’s comments are interesting because Jet Airways had said on 10 April it was not interested in participating in the Air India sale process.
"We welcome the government move to privatise Air India. It is a bold step. However, considering the terms of offer in the information memorandum and based on our review, we are not participating in the process," Jet Airways deputy chief executive and CFO Amit Agarwal had said in an e-mailed statement, according to Business Times. Goyal's statement indicates that Jet Airways is holding its cards on the expectation that the government would ease the terms and conditions for the sale.
Jet Airways’s comments come after IndiGo, the only airline to have publicly shown interest in buying parts of Air India, said it’s no longer keen on the airline, which has been put on the block after a taxpayer-funded bailout failed to stem losses. A successful conclusion is crucial for Prime Minister Narendra Modi to cement his credentials as a proponent of free markets.
Goyal said the plan to privatise Air India is “a brave and very good decision” for India, predicting that the process will ultimately prove successful.
The government proposes to sell 76 per cent of Air India and 100 per cent of Air India Express, the overseas budget unit — all to the same buyer. It also plans to sell half of the ground-handling subsidiary separately.
Singapore Airlines Ltd and the Tata Group, which run the joint venture airline Vistara, have said they are open to a deal for Air India, but haven’t elaborated.
The government on 1 May extended the deadline for submitting the expression of interest (EOI) for Air India to 31 May after none of India’s private airlines evinced interest. Air India was hoping to announce the successful bidder on 15 June, but this looks unlikely to happen.
On May 1, the government had also clarified its stand on over 160 queries it received from interested bidders over the disinvestment of Air India and its subsidiaries, Air India Express and AISATS (Air India Sats Airport Services Private Limited). These queries were mainly about the impact of the government's decision to retain a 24 per cent stake in the airline, the make-up of the airline's debt and liabilities, its latest financial performance, slots, and employee rights.
However, the government didn't change the basic terms of the sale offer, according to which the centre wants the bidder (a single company or consortium) to pick up only 76 per cent of the stake in Air India, including 100 per cent of Air India Express, and 50 per cent of AISATS, the ground handling subsidiary of AI. The government has also said that the successful bidder will also need to take on about Rs33,392 crore of debt and retain the airline staff for a year.