A day after reports of the Tata Group eying a large stake in cash strapped Jet Airways emerged, it has now come to light that the salt-to-software conglomerate wants a complete control over the airline, with the exit of its current promoters, including airline owner Naresh Goyal's family. Jet Airways Chairman Naresh Goyal and his wife currently own 51 per cent of the stake in the airline, while UAE-based Etihad Airlines owns 26 per cent stake in the company.
Though the proposal has been a breather for Jet Airways -- that is struggling with an adequate cash flow -- the initial talks seems to have failed as the Tata Group rejected Jet's proposal of 26 per cent stake and board level positions. The Tata Group seems disinterested in having joint control and part-ownership as it does not sync with the company's plan for a "scalable airline" venture.
During a recent meeting, the Tata Group made its intentions clear to the Jet Airways representatives -- either sell the entire company or its aircraft and infrastructure or there's no deal, reported the Economic Times. "The Tatas are interested in buying out the entire airline and significantly scaling up the existing business," said a top official, quoted the newspaper. While a Jet Airways spokesperson had said on Thursday that the news report was "totally speculative", there's no denying that such a deal could give the struggling airline a breather. Before this, American investment company TPG Capital had also declined Jet Airways' similar offer of part-ownership.
Tatas already have two joint ventures with Singapore-based Vistara and Malaysia's low-cost carrier AirAsia, but it is trying to increase its footprints in the aviation space. In April, Tata Sons Chairman Natarajan Chandrasekaran had said the group would consider whether adding another airline to its aviation business would make sense to its business prospects.
Jet Airways' plan to sell its stake is also a part of a major turnaround strategy, but alleged falsification of accounts and suspicious transactions coupled with its inability to pay salaries in time is causing a hindrance. Earlier this month, rating agency ICRA downgraded its long-term borrowing programme.
Now both the camps are still exploring ways to take the discussions forward, but some contentious points like full management control and the future role of Jet Airways Chairman Goyal could throw a spanner in the works. If the negotiations manage to progress to the next level, Etihad Airways may end up selling its 24% stake in Jet Airways to the Tatas, say experts.