Tatas confirm ‘preliminary’ talks on Jet Airways; stock rallies 40% in 5 days

0
14
Tatas confirm 'preliminary' talks on Jet Airways; stock rallies 40% in 5 days

In a six-hour long marathon meeting held on Friday, the board members of Mumbai-based Tata Sons discussed the possibility of taking over the crisis-ridden Jet Airways. However, the company is yet to make a concrete proposal in this regard. Even as the discussions continued, the speculation sent the carrier’s stock soaring to end the trading session at 8.7% higher. The stock has risen by around 40% in the past five days.

Tatas confirm ‘preliminary’ talks on Jet Airways; stock rallies 40% in 5 days

“Over the last few days, there has been growing speculation in the print and electronic media about Tata’s interest in Jet Airways. We would like to clarify that any such discussions have been preliminary and no proposal has been made,” said Tata Sons in a statement later. Amit Agarwal, CFO of Jet Airways, had admitted on Monday that the airline is in talks with multiple interested parties for fund infusion and selling off stakes in its loyalty programme. Earlier, the airline management had termed the reports over talks with Tata Sons as “speculative”.

Tata Sons already owns full-service carrier (FCC) Vistara in partnership with Singapore Airlines and AirAsia in a JV with Malaysia-based AirAsia Group Berhad. It is believed that the salt-to-software conglomerate now wants to take advantage of Jet Airways’ wide international network for giving wings to Vistara’s dreams of flying internationally. However, the contention has been over the issue of Tata Sons wanting complete control over the management, which the promoter Naresh Goyal is at present said to be hesitant, the sources claim. Promoter Naresh Goyal along with his family owns 51 % stake while Gulf-based Etihad Airways owns another 24 % in the airline.

Jet Airways on Monday reported a consolidated net loss of Rs 1,261 crore for the latest quarter (Q2) ending September 30, 2018, in comparison to the net profit of Rs 71 crore during the similar period last year. A back of the stamp calculation reveals Jet Airways has been losing around Rs 14 core every day which is higher than the per day losses of less than Rs 10 crore incurred by debt-ridden Air India last year.

According to industry observers, Jet Airways has been facing headwinds for the past few quarters. The deciding point came in August after the top management of the airline told its employees that it will not be able to survive beyond 60 days if cost rationalisation measures are not taken. Though airline denied the reports, it accepted that cost-cutting measures are on.

source: dnaindia