PM Modi Asks Tata Sons to Help Rescue Jet Airways: Report
Tata Sons board likely to meet today to discuss proposal to buy out cash-stripped Jet Airways.
The Narendra Modi government has asked Tata Sons Ltd to help rescue cash-strapped Jet Airways, Bloomberg reported quoting sources.
However, in a press statement made on Friday, 16 November, it was announced that amid speculations about Tata’s interest in Jet Airways, the “discussions have been preliminary and no proposal has been made”.
Jet Airline's deputy chief executive and chief financial officer Amit Agarwal earlier this week had admitted that the company was in talks with "multiple interested parties" for fund infusion as well as selling six of its Boeing 777 planes along with a stake in its loyalty progarmme Jet Privilege.
While a spokesperson of Tata Sons, which already runs two airlines – the full-service carrier Vistara in a JV with Singapore Airlines, and the low-cost carrier AirAsia India in JV with Air Asia of Malaysia – refused to comment on the "speculation". Jet Airways did not respond to the queries on the same from PTI.
“We do not comment on speculation,” a spokesperson at Tata Sons, which originally owned the present national carrier Air India, said when asked for confirmation.
However, the news made it big on the market with the Jet Airways counter soaring. The rumour of the rescue deal by the Tatas sent Jet shares zooming 26.41 percent on the NSE to settle at Rs 326. In the past four trading sessions the stock gained over 32 percent.
Meanwhile, amidst talks about government nudging the Tatas to bail out the struggling airline in the social media, an aviation ministry official denied that government is brokering a deal which may include the lenders and other stakeholders of the Naresh Goyal-run airline taking a haircut.
Stating that the ministry is not “involved” in any such process at this stage, aviation secretary RN Choubey told PTI that “the aviation ministry is not involved in this process so far. Hence any question of haircut (by banks and other stakeholders) etc does not arise.”
Besides Goyal, who along with his family owns 51 percent stake in the company, Gulf carrier Etihad Airways owns 24 percent in the cash-strapped airline which earlier this week reported Rs 1,261 crore in losses for the September quarter against a profit of Rs 71 crore y-o-y, making it the third straight quarters of heavy losses.
This had the airline also putting as many as six of its Boeing 777s on sale to part-fund liquidity.
Media reports suggest that the parent company of Vistara, Tata-Singapore Airlines, is looking at all-stock merger with Jet Airways as part of the Tata group's plans to board Goyal's full service carrier.
In an exchange filing, Jet Airways described the media reports as speculative.
“...the subject news is speculative in nature and that there is no discussion or decision in the board which would require a disclosure...,” the airline informed BSE.
According to the media report, the two sides are inching towards a two-step transaction that would first see Jet merging with Tata-SIA that runs Vistara through a share swap to form a new JV, which will have the Goyal family, Etihad, Tata Sons and Singapore Airlines as partners.
"We are currently at various stages of discussions with multiple interested parties for both part stake sale in Jet Privilege and fresh equity infusion," Agarwal had told analysts during the post-earnings concall Tuesday.
He had also said the company hired investment bankers and consulting firms to carry out these tasks.
The cash crunch in the second largest airline by market share has resulted in delayed payments to its vendors and salaries to a section of its over 16,000 employees.
(With inputs from PTI)
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