Tata ‘in talks’ to buy majority stake in Jet

NEW DELHI/MUMBAI: Indian conglomerate Tata Sons Limited is in active talks to acquire a controlling stake in Jet Airways, according to four people aware of the negotiations, in what could potentially be a lifeline for the debt-laden carrier.

“Tata is very interested in Jet but it is not at a stage of conducting due diligence or looking through non-public data,’’ said two of the people, who spoke on condition of anonymity as the discussions are private.

Tata told Reuters that it would not comment on speculation. Jet did not respond to an emailed request for comment.

“One potential deal structure could include Tata taking over Jet’s assets including the planes, leases, pilots and slots but not the whole company,’’ one of the people said.

“The first step is to see if the economics are viable, if it makes sense from the cost and strategy perspective, and if Tata can make it work with its other aviation businesses,’’ the person said.

Tata already owns and operates two airlines in the country: full-service carrier Vistara, which is in partnership with Singapore Airlines, and low-cost carrier AirAsia India in combination with AirAsia Group Bhd.

The talks come as a mix of rising oil prices, a weak rupee, low fares and competition has seen profit dive in the world’s fastest-growing aviation market, which is clocking 20% annual passenger growth.

Jet, founded by entrepreneur Naresh Goyal, is struggling to make payments to creditors including aircraft lessors and employees, and has seen its share price plunge 70% so far this year.

The airline said on Monday that it would cut flights on less profitable routes and add capacity to more lucrative markets as part of a broader consolidation plan to reduce costs and boost revenue after it reported its third consecutive quarterly loss.

“Any investment by Tata in Jet is, however, contingent to Goyal stepping down so that Tata has the power to take the decisions necessary to turn the airline around,’’ the people said.

Goyal owns 51% of the airline while 24% is held by Etihad Airways.

“A lot of deal structures are possible and being explored,” said one of the people. “The only structure that is not viable is one with Goyal in it.”

Mint newspaper earlier yesterday reported, citing two people directly aware of developments, that Tata was conducting due diligence on Jet as it considered buying a controlling stake.