[dropcap]A[/dropcap]fter cash-strapped airline Jet Airways on Monday evening announced its worst quarterly earnings since the air carrier commenced its operation in 1993, conglomerate Tata Sons is in active talks to acquire a controlling stake in the aviation firm, sources told news agency Reuters.
Tata is very interested in Jet but it is not at a stage of conducting due diligence or looking through non-public data, said two of the people, who spoke on condition of anonymity as the discussions are private.
Tata told Reuters it would not comment on speculation. Jet did not respond to an emailed request for comment.
One potential deal structure could include Tata taking over Jet’s assets including the planes, leases, pilots and slots but not the whole company, one of the people said.
The first step is to see if the economics are viable, if it makes sense from the cost and strategy perspective, and if Tata can make it work with its other aviation businesses, the person said.
Tata already owns and operates two airlines in the country: full-service carrier Vistara, which is in partnership with Singapore Airlines, and low-cost carrier AirAsia India in combination with AirAsia Group Bhd.
Jet, founded by entrepreneur Naresh Goyal, is struggling to make payments to creditors including aircraft lessors and employees, and has seen its share price plunge 70% so far this year.
The air carrier faced a net loss of Rs 1,297 crores in the second quarter ending September 30, 2018. Even in the state of loss, there is a 9.5 % growth in revenue as compared to the same quarter last year.
In the same quarter last year, the profit of the airline carrier was recorded at Rs 49.6 crore.
Several factors including a hike in fuel prices, tough market competition and the weakening of domestic currency are the factors being reported behind the air carrier’s major loss.
On November 3, the second-largest airline in India had urged their travel agents to sell its tickets to avail of last year’s incentives.
Earlier, Jet Airways had reportedly offered its pilots an option to leave the airline without serving a notice period as the cash-strapped carrier aims to cut capacity and scale down its operations.
Media reports also claim that in the past few months, more than 50 Jet Airways pilots have resigned, with a majority of them serving a notice period of just 48 hours.
(With inputs from Thomson Reuters)