Jet Air likely to restart bailout talks with Tatas

Financial Chronicle - - FRONT PAGE - PR SANJAI & SALONI SHUKLA

JET Air­ways In­dia, the air­line which had its credit rat­ing cut to de­fault this month, is weigh­ing a re­sump­tion of stake-sale talks with the Tata Group as the car­rier is poised to run out of cash, peo­ple with knowl­edge of the mat­ter said.

While its founder and chair­man Naresh Goyal has been dis­cussing a deal with Eti­had Air­ways, talks with the for­eign part­ner stalled over the lat­ter’s de­mand that Goyal step aside from his man­age­ment role, the peo­ple said, ask­ing not to be iden­ti­fied as the dis­cus­sions are pri­vate. With Jet Air­ways set to run out of cash in about a month, the car­rier is now look­ing to restart talks with In­dia’s big­gest con­glom­er­ate, they said.

Tata said in Novem­ber that it held “pre­lim­i­nary” talks with Jet Air­ways though no pro­posal was made. Ac­quir­ing Jet Air­ways’s busi­ness could give the con­glom­er­ate’s fledg­ling aviation unit a shot at dom­i­nat­ing the fastest-grow­ing ma­jor air-travel mar­ket, where fares as low as 2 cents have kept the in­dus­try un­prof­itable for a decade.

A Jet Air­ways rep­re­sen­ta­tive said the com­pany does not com­ment on spec­u­la­tion, while Tata Sons didn’t re­spond to an email seek­ing com­ment. Jet re­ported its third straight quar­terly loss in Novem­ber as li­a­bil­i­ties surged. It has fallen be­hind on pay­ments to staff and lessors.

Goyal and Tony Dou­glas, chief ex­ec­u­tive of­fi­cer of Eti­had, which owns 24 per cent of the car­rier, have met State Bank of In­dia chair­man Ra­jnish Ku­mar mul­ti­ple times to ex­plore ways to keep the air­line afloat, the peo­ple said.

Dis­cus­sions stall

Cred­i­tors are open to lend­ing $500 mil­lion to Jet Air­ways if Goyal and Eti­had in­ject a sim­i­lar amount into the com­pany, the peo­ple fa­mil­iar said.

A de­ci­sion will be made once a foren­sic ex­am­i­na­tion be­ing con­ducted into the air­line’s books is com­pleted, one of the peo­ple said.

The Tata Group and lenders to Jet Air­ways have been in touch on the progress of dis­cus­sions with Eti­had, the peo­ple said.

The 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. Credit as­ses­sor Icra cut its rat­ing on Jet Air­ways’ loans and bonds to D, a score that sig­ni­fies that bor­row­ers are in de­fault or are ex­pected to be soon.

Jet Air­ways is the lat­est In­dian air­line in trou­ble. King­fisher Air­lines, founded by beer ty­coon Vi­jay Mallya, ended op­er­a­tions in 2012 af­ter fail­ing to clear its dues to banks, staff, lessors and air­ports. SpiceJet al­most col­lapsed two years later be­fore its founders re­turned to gain con­trol and re­vive the com­pany.

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