Tatas say no offer to Jet Airways yet, talks only preliminary

The Jet stock opened with an over 14 percent gap in the morning expecting a positive outcome from the Tata Sons board meeting.
Tata Steel and Jet Airways. (File Photo)
Tata Steel and Jet Airways. (File Photo)

BHUBANESWAR :  Tata Sons, the holding company of Tata Group, said on Friday that it is in initial discussions with Jet Airways and clarified that it has made no proposal so far to buy a stake in the cash-strapped carrier.“We would like to clarify that any such discussions have been preliminary and no proposal has been made,” Tata Sons said in a statement after a Board meeting, referring to speculations in the media that the Tata-Jet Airways deal was imminent. While the Board members remained tight-lipped during its meeting, the statement was issued only later in the day.

Meanwhile, the buzz has sent the Jet shares soaring over 40 per cent in the past five trading sessions alone. The clarification from Tatas could further escalate the share prices to a new high.It has been widely reported that it was the Narendra Modi administration that approached the salt-to-software conglomerate to help rescue the beleaguered airline. If the deal materialises, this would be Tata’s third investment in the aviation sector after two joint ventures with Singapore Airlines Ltd and AirAsia India.

According to industry experts, there is scope for a mass reduction in staff and maintenance cost, where Jet pays at least 10 per cent more than InterGlobe, the operator of IndiGo.For Jet Airways, a stake sale would ease its cash crunch that has delayed salaries to its employees and payments to aircraft-leasing firms. The merger would also necessitate the departure of Jet Airways’ founder Naresh Goyal.

Jet had posted its third consecutive quarterly loss on Monday, triggered by costlier fuel and its inability to pass on higher costs due to competitive fares in the world’s fastest growing aviation market. 
The airline, which has lost nearly 70 per cent of its market value this year, said it is undertaking a review of its business to boost revenues in order to stay afloat.

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