India’s Tata asked to explore buying Jet stake

Losses at Indian carriers will balloon to as much as $1.9b in the current financial year

Indian Prime Minister Narendra Modi’s government has sought Tata Sons Ltd’s help to rescue struggling Jet Airways India, people familiar with the matter said.

Tata Sons is in talks with the government about a potential haircut to state-run banks on Jet’s loans as part of the plan, while Airports Authority of India may forgo some of its dues, one person said yesterday, asking not to be identified as the talks are private. The Tata Sons board is due to deliberate on the matter today, sources said.

The structure of the potential deal has not been finalised, they said. One option is to combine Jet with Vistara, an airline venture Tata runs with Singapore Airlines Ltd, one person said. India’s Economic Times said earlier that the companies are weighing a potential all-stock merger of the carriers — something Jet said was speculative.

Jet shares rose 24 per cent, the biggest single-day gain on record, to close at Rs320.90 in Mumbai.

Any investment by Tata Sons will catapult the group to the top league of Indian aviation, dominated by budget carrier IndiGo, while providing a lifeline to Jet, which is falling behind on payments to lessors and staff.

Jet Airways is struggling to survive in a market where intense competition has depressed fares and high fuel prices, made expensive by local levies, negate gains from a surge in travel. The company reported its third straight quarterly loss on Monday with surging liabilities that signalled a deepening of financial distress. A weakening rupee also added to its woes.

Losses at Indian carriers will balloon to as much as $1.9 billion in the year ending March 2019, and they need to raise more than $3 billion in working capital in the near term, according to Sydney-based consultancy CAPA Centre for Aviation. Tata Group’s whiteknight act to take a stake in Jet Airways is unlikely to alter the Indian aviation market,” said Rahul Kapoor, a transportation analyst for Bloomberg Intelligence.