Tata eyes all-stock merger of SIA Airlines with Jet Airways: Report

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In the second leg, Singapore Airlines may purchase the entire stake of Jet Airways promoter Naresh Goyal’s family in the combined entity

The first leg of Tata Group’s plan to acquire a controlling stake in Jet Airways may see a merger of the beleaguered airline with Tata SIA Airlines, a joint venture between Tatas and Singapore Airlines that operates Vistara, The Economic Times reported.

Talks between the managements of Tata group, Singapore Airlines and Jet Airways gathered pace after US private equity giant TPG Capital opted to go slow on its talks to acquire a stake in Jet Airways. As per the report, Jet Airways will first merge with Tata SIA through a share swap, with the Naresh Goyal family, Etihad, Tata Sons and Singapore Airlines all become partners in the new company.

n the second leg, Singapore Airlines may purchase the entire stake of Jet Airways promoter Naresh Goyal’s family in the combined entity, sources told the paper, adding that Etihad may continue with the venture as a minority shareholder.

Naresh and wife Anita Goyal own 51 percent in the airline and UAE’s Etihad Airways holds 24 percent stake. “If Etihad needs an exit, we are ready to buy them out as well. Eventually, Tatas and Singapore Airlines will control the entity,” a source told the paper.

If the deal is successful, Tata Group will be able to kick-start it’s aviation plans as it will secure Jet Airway’s landing rights, routes and related infrastructure amenities.

Tata and Singapore Airlines are expected to infuse capital to enable Jet-Vistara to combine their functions effectively, the report said. “The buyout will give access to slot landings that Tatas are keen on and not the relationships that Jet has with various partners. The attempt is to work out a way where there would not be substantial cash payment involved in the buyout,” a source told the paper.

Once the deal basics are ironed out, sources added it would come to the Tata Sons board, Singapore Airlines and then Vistara.

Media reports said Tata Sons Chairman N Chandrasekaran is keen to work out the deal as it would strengthen the group’s position in the aviation business and give it a much-needed heft.

Jet Airways has a considerable presence on the ground with its 124 aircraft that operate nearly 700 flights a day. The airline flies to and from 66 destinations and has a market share of 15.8 percent

Its Chief Financial Officer Amit Agarwal, however, said there was considerable investor interest both in the cash-strapped airline and the miles reward programme – Jet Privelege – it co-owns with Etihad. The airline has been in talks with both strategic and financial investors to sell assets and a major chunk of its business to stay afloat.

As of August, Jet Airways’ domestic market share has fallen to 15.8 percent (including the share of Jet Lite, its low-cost unit) from 18.2 percent in 2017 and 19.7 percent in 2016.

On the other hand, its competitor IndiGo has seen its share increase to 40.6 percent from 38.2 percent over the two-year period.

Rising fuel costs haven’t helped Jet Airways’ cause. It posted a loss of Rs 1,323 crore in Q1 FY19, following an Rs 1,045 crore dip in Q4 FY18.

After reporting its first quarter results in August, Jet Airways’ CEO Vinay Dube had said the airline has a turnaround plan, which includes a cost reduction programme of Rs 2,000 crore over two years.