29 March 2019: Jet Airways’ top lender State Bank of India and its founder Naresh Goyal have reached out to private equity giant TPG Capital and US carrier Delta Air Lines to explore the possibility of a stake purchase in the beleaguered airline.
Two people in the know said that while SBI has begun exploratory talks with TPG, Goyal has reached out to Jet’s commercial partner Delta.
A senior bank official confirmed that TPG has been sounded out but cautioned that talks are very preliminary in nature and the real picture will emerge only after the bank asks for expressions of interest (EoIs) early next month.
“TPG is in touch but they being a PE fund are unlikely to take a majority stake. They may at best take some minority stake. Only airlines may be interested in buying a large stake. There may be other airlines interested which we will know only after the EoIs come in. This is all at a very preliminary stage right now so nothing can be said,” this official said.
Both had been wooed previously by Goyal without success. TPG Capital last year had shown interest in Jet’s loyalty programme Jet Privilege which was also up for sale.
A team from Delta visited Jet’s Mumbai office thrice this week. A third person in the know said this was to explore synergies in maintenance and engineering with the airline. Jet has deep commercial ties with the Air France-KLM combine and through them with Delta.
TPG declined to comment. Delta said it does not comment on market speculation. SBI and Jet didn’t reply to emails till the time of going to press.
AIRLINE DEFAULTS ON ECB REPAYMENT
Meanwhile on Thursday, Jet informed the BSE that it has defaulted on repayments on external commercial borrowings, due on March 28, raised for working capital purposes. It attributed the default to “temporary liquidity constraints” and said it has engaged with the lender for the same. It didn’t elaborate.
State-run banks took over the board and management of Jet on Monday with 50.1% stake, Goyal’s holding was reduced from 50.1% to 25.5%, Etihad Airways’ share came down to 12% from 24% and public shareholders were left with 12.5%. Goyal resigned as chairman and board member.
Jet’s lenders are now looking for a new buyer. The bids will be thrown open on April 9 and the last date for submitting bids is April 30. The lenders hope to find a new buyer for Jet by June-end. Jet CFO Amit Agarwal said the bidding is nonrestrictive and both Goyal and Etihad can bid.
Jet, in the throes of acute financial distress, has defaulted on loan repayments, lease rentals and vendor payments. It has also delayed salaries, grounded planes and laid off staff.
But on Thursday, Jet told its travel agents that it is reinstating more than 60 domestic flights between March-end and April 25.
One of the people cited above said that while there may be little change in the number of grounded aircraft by then, the airline will redeploy its international capacity, primarily by cancelling some flights to Gulf, on domestic routes.
The flights that will be resumed include those between Mumbai and Hyderabad, Ahmedabad, Jaipur, Indore, Aurangabad, Pune, Goa and from Delhi to Jaipur, Lucknow, Indore, Bhopal, Bhuj, among others.
“Guests who have been re-protected by you on alternate flights due to cancellation of the above flights can be rebooked on the original flights in the lowest available RBD (reservation booking denominator) in the same cabin without any ADC (additional collection),” Jet said in a letter to agents, indicating that no additional charge should be levied on booking the passengers back.
One of the sources added that Jet is currently flying just 35 planes, down from its original fleet of 124 planes in December. Jet’s Agarwal told ET that lessors have agreed to give the airline more time and that Jet will have 75% of its fleet flying in a month.