Tata Group reportedly had begun due diligence of Naresh Goyal owned Jet Airways.
Tata Group reportedly had begun due diligence of Naresh Goyal owned Jet Airways. If a report published in Mint is to be believed then Tata Group is conducting due diligence of Jet Airways (India) Ltd with Saurabh Agarwal, chief financial officer of Tata Sons Ltd, leading the initial talks.
“An in-house team of Tata Sons is currently conducting due diligence on Jet Airways, which is expected to continue for the next few weeks,” the publication quoted a person close to the development as saying.
Earlier there were reports that Reliance Industries Chairman Mukesh Ambani might invest in cash-strapped Jet Airways. Jet Airways' founder Naresh Goyal had reportedly approached Reliance Industries Ltd (RIL) chairman Mukesh Ambani and chairman emeritus of Tata Group Ratan Tata to raise capital for the airline.
Meanwhile, Jet Airways on Monday reported a consolidated net loss of Rs 1,261 crore for the second quarter (Q2) ended September 30, 2018. The carrier had posted a net profit of Rs 71 crore during the corresponding period last fiscal.
The airline's current liabilities exceed its current assets. The management blamed the rising aircraft fuel cost that increased over 50%, depreciating rupee, a challenging airfare pricing situation in a domestic market with over capacity among the prime reasons for the continued losses. The company had declared Rs 1,323 crore of loss during the previous quarter.
A back of the envelope calculation shows that Jet Airways has been losing around Rs 14 core every day. In comparison, the debt-ridden national carrier Air India's per day losses were at less than Rs 10 crore last year.
Concerned over the severe losses, Jet Airways, which is working on a turnaround strategy, is believed to be in talks with a few private equity firms and corporates including Tata Sons for fund infusion.
The point of contention, according to reports, has been a controlling stake of 51% that Tata Group is demanding while Goyal is said to be opposing it. Mumbai-based Tata Group, which already runs two airlines in India – the full-service carrier (FCC) Vistara and low-cost carrier (LCC) AirAsia – wants to merge Jet Airways with the former.
Additionally, Jet Airways's management said it plans to save around Rs 2,000 crore over the next couple of years by the way of sub-leasing some of its fleet, renegotiation of contracts, better utilisation of resources, etc. Cost saving of over Rs 500 crore has already been realised to date (in H1FY19), the airline said in a statement.
Analysts say that while the industry is in adding capacity despite the massive losses, Jet Airways has consciously begun to reduce it. Airlines increased domestic capacity by 18% during Q2 of this financial year (FY), but Jet Airways reduced it by 4%. Similarly, while the industry capacity grew 14% (Q2FY18), 14% (Q3FY18), 18% (Q4FY18), 18% (Q1FY19), Jet Airways recorded an increase of just 6.7%, 6.7%, 6.6%, 6.8%, respectively.
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 "Jet Airways cash crisis: Tata group in talks to buy Naresh Goyal's airline?")
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