JET AIRWAYS - A JET PRIVILEGE

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        The Tata group has been one of the largest business conglomerate in the world. The $150 Billion group in terms of market capitalization, has its footprints in various markets and different sectors of the economy. With a presence in industries from steel to salt, it has been vying to enter into the airlines industry for a long time. Though it was the founder of the Air India airlines, it lost its control over the airlines company after India gained her independence, when large number of private companies were being converted into public sector companies.
      In 2013, it entered into a joint venture with the Singapore Airlines to enter the Indian aviation market. The joint venture was names as TATA SIA Airlines limited. It started its operations under the brand name of Vistara in 2015. With the Indian Airlines market growing at a rapid pace along with the rise in the income of the middle class, it is providing huge business opportunities in the Airlines sector of the economy. The Tata group is looking to expand its business operations to take advantage of the rising business opportunities.


     With the cash crunch airlines company Jet Airways on the verge of being bankrupt, the Tata group seems to take an interest in acquiring a stake in the company. According to different sources, the deal would involve in two steps. Firstly there would be a merger of both the Jet Airways and Vistara to form a single entity Airlines company. Secondly there would be an acquisition of the Goyal families stake in the Jet Airways by the TATA SIA Airlines limited. The buyout gained momentum when the US private equity giant TPG Capital opted to go slow on its talks to buy a stake in the Jet Airways. As per the terms under discussion, Jet Airways will first merge with Tata SIA through a share swap. 
     Etihad Airlines already has a stake in jet Airways. If the deal goes ahead then Etihad’s share in the airlines will be decreased to a minority shareholder. In case Etihad Airways wants to sell its stake in Jet Airways, then the TATA SIA Airlines limited is willing to purchase it from them. As on 15th November, 2018,  Naresh Goyal and his wife Anita Goyal own 51% in the airline while UAE’s Etihad Airways holds 24% stake in the Jet Airways.


     The buyout plan by the TATA group is being headed by Tata group’s chairman N Chandrasekaran and his mergers and acquisitions team with significant inputs and suggestions from chairman emeritus Ratan Tata. 
      If the deal goes through then it would strengthen the Tata groups hold in the Airlines sector. It would also pose huge challenge to market leaders like Indigo Airlines and Air India. The buyout will also secure the landing rights, routes and related infrastructure amenities of Jet Airways after the deal. 



 






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