India's Tata Group is rumoured to have held preliminary talks to buy a significant stake in the struggling Jet Airways. The airline, founded by Naresh Goyal, which has delayed salaries to pilots and faces the prospect of defaulting on payments, is believed to have sought an equity collaboration. However, Tata Sons, parent of the $103 billion business behemoth, has sought management control. When contacted, a Tata Sons spokesman declined to comment, while a Jet Airways spokesperson termed the report “totally speculative”.
Tata has two aviation joint ventures, one with Singapore Airlines operating Vistara, and a second with budget airline Air Asia. A deal with Jet would possible help the Tatas scale up the aviation business in terms of network depth, fleet presence and market share. It's full services carrier Vistara competes directly with Jet. It is believed that Tata Group would want to acquire at least 26 per cent in Jet. Such an acquisition would trigger an open offer to buy an additional 26 per cent from Jet's shareholders. Etihad Airways owns 24 per cent in Jet. Earlier this month, the Abu Dhabi-based carrier made a $35 million “cash pre-purchase payment” to Jet to improve its financials.
While there are several contentious points like management rights, and the future role of Jet Chairman Goyal that could derail the talks, both camps are reportedly finding ways to take discussions positively forward. Goyal, along with wife Anita who owns 51 per cent shares, is reported to have held one round of talks with buyout investor TPG. The talks but, did not progress due to differences over controlling rights.
