After withdrawing from acquisition talks last year, Tata Group has once again set its sights on Jet Airways, which is now undergoing bankruptcy resolution at the National Company Law Tribunal.
The salt-to-software conglomerate runs two airlines – full-service airline Vistara and budget carrier AirAsia India. While Vistara is a joint venture with Singapore Airlines, the other has a tie-up with Malaysia-based AirAsia Bhd. It is aiming to use Jet Airways assets to scale up its operation and fill the vacuum left behind by the grounding of India’s second largest airline by market share.
To back their plans, the Tatas have lined up 45 billion rupees (US$652 million) for the two airlines, to boost its presence in the budget airline and full-scale airline space, Business Standard reports.
AirAsia India aims to double its fleet from 21 to 40 aircraft by April next year and plans to start international operations to Sri Lanka, Thailand and Malaysia by September 2019.
Vistara was recently given permission to fly overseas and is looking to acquire the grounded Jet Airways aircraft to fill its rising demand. It is also keen to fill the void left behind by Jet Airways on flights to European destinations. The only rival, state-owned carrier Air India, is beset with its own financial problems. For long-haul flights to the US, Air India remains the sole rival.
The Tata Group had withdrawn from talks last year to acquire Jet Airways, which was then run by its founder Naresh Goyal, as the airline had many liabilities and Goyal was reluctant to cede management control.
Jet Airways suspended operations on April 17 after it ran out of cash. Last week, the company law tribunal admitted the insolvency plea put forth by country’s largest lender State Bank of India to put Jet Airways under the resolution process. The airline is saddled with a total liability of 250 billion rupees ($3.62 billion).
Also Read: India’s Jet Airways stares at shutdown
The airline watchdog Directorate General of Civil Aviation has allowed rival airlines to occupy slots which were used by Jet Airways at various Indian airports until December. Once the insolvency process is completed, the new investor will be allowed to take them back.
Etihad also in fray
Other than the Tata Group, a consortium of diversified conglomerate Hinduja Group and Abu Dhabi-based Etihad Airways is also keen to bid for Jet Airways’ assets, Moneycontrol reports. Etihad holds a 24% stake in Jet Airways and based on exchange filings is not classified as part of the airline’s promoter group and falls in the public shareholder category, the website added.