A consortium of banks led by the State Bank of India has approached TPG Capital and Delta Air Lines (DL, Atlanta Hartsfield Jackson) for possible investment and a takeover of the 50.1% stake in Jet Airways (Mumbai International), the Economic Times has reported.
The banks will open the window for explicit expressions of interest from the investors on April 9 and will close the bidding phase at the end of April. They aim to conclude the sale of the controlling stake, currently held by the banks in the interim, by the end of June 2019.
Sources stressed that talks with both potential investors are at a very preliminary stage. TPG Capital, one of the world's largest private equity funds, could potentially take only a minority stake. In terms of airlines, the fund already has Azul Linhas Aéreas Brasileiras in its portfolio. It also invested in Continental Airlines prior to its merger with United Airlines.
Delta is reportedly interested in capitalising operational and commercial synergies with Jet Airways, building on the existing enhanced cooperation between the Indian carrier and Air France-KLM. The Franco-Dutch holding is Delta's transatlantic joint venture and Skyteam partner.
In an unexpected twist, Etihad Airways is also reportedly planning to bid for a larger stake in Jet Airways. The Emirati carrier owned 24% of the Indian airline but recently said it will not be participating in the rescue plan and put its entire stake up for sale. The Hindu has reported, however, that Etihad is now in talks with an undisclosed partner to bid for the banks' stake.
It is unclear if Etihad's potential bid would be related to TPG's or Delta's.
Indian law bans foreign entities from holding a majority stake in domestic carriers.
Meanwhile, despite the implementation of the rescue plan and the injection of INR15 billion rupees (USD218 million) in immediate support by the banks, Jet Airways defaulted on yet another loan. On March 28, the airline said it had missed the deadline for repayment of a USD109 million debt to HSBC Bank citing "temporary liquidity constraints".
Following the implementation of the rescue plan, banks currently own a 50.1% stake in Jet Airways acquired through an equity-for-debt swap. Founder and ousted Chairman still holds a 25.5% stake but has been barred from any executive functions. Etihad's stake now stands at 12.5%. The structure is expected to change once the new investors are brought on board.
