Jet Airways may land with the Tatas

“Singapore Airlines is assisting in the bidding process & may pick stake; last date of submission of bids is Apr 9”

The Tatas are known to be interested in the acquisition of the cash strapped Jet Airways, which has been put up for sale by its lenders.

In a bid to find a buyer at the earliest to mobilise an estimated ₹8,500 crore for revival, banks, led by the State Bank of India (SBI), on Thursday decided to invite expression of interest (EoI) from interested parties on April 6, 2019 and the Tatas are planning to submit a bid, people familiar with the development said. The last date for submission of bids is April 9. A Tata Sons spokesperson said, “We do not comment on market speculation.”

Last November, the Tatas, who run vistara & Air Asia in joint ventures is has held meetings to discuss their investment in Jet Airways. Tata Group chairman N Chandrasekaran has even taken the proposal to the the Tata Sons board for approval. However they withdrew owing to jet’s promoter wanting to retain control over the assets of the airline, which the Tatas did not accept.

Now that Mr Goyal is out of the scene, Tatas may be interested in making a bid.

Earlier, it was estimated that they would invest about $1 billion to acquire a controlling stake in Jet, but now there has been a sharp erosion in value as the airline is on the brink. Analysts estimate Jet’s total liability at more than $2 billion, including bank and aircraft loans of ₹7,500 crore. Little is known about how much debt had been accumulated in last six months.

“The last six months has been damaging for Jet Airways. The delay has eaten away the company. Six months back, the valuation could have been better. Now, it is up to the banks on how much haircut they can accept,” said Ansuman Deb, aviation analyst, ICICI Securities.

It is understood that Singapore Airlines, which holds 49% stake in Tata SIA Airlines that runs Vistara, is assisting in the bidding process and may pick up a stake.

Broader Plan

According to the analysts, Tatas are trying to make a broader plan to integrate its airline ventures with Jet Airways. Also a combination of Jet, Vistara and Air Asia India can pose a formidable challenge to IndiGo, which is heading towards a near monopoly situation.

The Tatas will be a good option for Jet Airways as they can consolidate and combine their strengths and expertise in operating the aviation sector. The indian aviation sector needs a consolidation , said an analyst. He also said

“Air India will survive because it is running with government money, IndiGo will be getting all powerful with $2 billion cash on its books of account. We need one more large airline to match up to IndiGo. Tatas can make it and give a tough competition to IndiGo. Others like SpiceJet and GoAir are too small”

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1 Comment

  1. May 5, 2019 - 12:22 am

    Thanks, it’s very informative

    Reply

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