Jet Airways back on the table for stake sale talks with Tatas: report
11 January 2019
With Jet Airways set to run out of cash in about a month and lenders demanding more than a stake reduction for a $900 million revival package, the Naresh Goyal-promoted airline is now looking to restart stake sale talks with Tata Group, say reports.
While its founder-chairman Naresh Goyal has been discussing a deal with lenders and its partner Etihad Airways PJSC, after talks with Tatas deadlocked, all of them have demanded Goyel’s exit from the airline’s board as the main condition for injecting cash into the loss-hit carrier.
The Beleaguered carrier, which had its credit rating cut to default this month, is weighing a resumption of talks with Tata Group for the proposed stake stale, say reports.
Tatas had in November held “preliminary” talks with Jet Airways, though no proposal was made. The group, which already is into two airline joint ventures – one with Malaysia’s Air Asia and the other with Singapore Airlines – can hope to dominate Indian skies by acquiring Jet Airways’ business.
Creditor banks led by State Bank of India (SBI) have, meanwhile, proposed a $900 million turnaround plan for Jet Airways, involving $450 million in fresh equity and $450 million in loans after Goyal and Tony Douglas, chief executive officer of Etihad, which owns 24 per cent in the Indian carrier, met SBI chairman Rajnish Kumar several times to explore ways to keep the airline afloat.
Creditors are open to lending up to $500 million to Jet Airways if Goyal and Etihad inject a similar amount into the company, people familiar with the developments said. However, a decision on injecting cash into the airline will be made only after a forensic examination being conducted into the airline’s books is completed.
The Tata Group and lenders to Jet Airways have been in touch on the progress of discussions with Etihad, the people said.
The Indian carrier missed an interest and principal repayment at the end of last year, giving it about 90 days to clear the dues and avoid becoming a non-performing asset.
There is, however, no word from either Jet Airways or Tata Sons.
Jet Airways reported its third straight quarterly loss in November as liabilities surged. It has fallen behind on payments to staff and lessors.
If Jet Airways, which has overdue debt and payments to staff, lessors and airports, fails to find an investor or financier, the airline could go the Kingfisher way.
Rival SpiceJet Ltd, which almost collapsed four years later ago avoided a calamity after its founders returned to gain control and revive the company.