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With Jet in NCLT hangar, assets on Tata radar

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With Jet in NCLT hangar, assets on Tata radar

Tata Group will focus on assets it can use to scale up & tap the gap created by the exit of Jet.

The Tata Group plans to bid for some assets of Jet as it undergoes bankruptcy resolution, said people with knowledge of the matter. It had told bankers as much when they sought to interest the group in a rescue plan before the carrier was sent to bankruptcy court. The focus for the Tata Group will be assets it can use to scale up and tap the gap created by the exit of Jet, officials said.
“We were reluctant when it was on the books of the company. Now that it’s with NCLT (National Company Law Tribunal), one can look at the bilateral rights and whatever is available in terms of fleet to quickly grow our business,” said one of the persons. “There is no value in buying the company anyway.”

The Tata Group had withdrawn from talks for a possible acquisition in November 2018. The board of group holding company Tata Sons advised caution due to worries over the Naresh Goyal promoted airline’s liabilities and ownership. The Tata Group has a presence in aviation through budget airline AirAsia India Pvt Ltd and full-service carrier Vistara, a joint venture with Singapore Airlines Ltd.
“With demand evidently remaining unfulfilled, we like other airlines have sought to get more aircraft into our fleet, including those grounded at present,” said Tata SIA Airlines chairman Bhaskar Bhat. “Acquiring (Jet’s) Boeings makes our otherwise A320 Airbus fleet asymmetric but it will at least service the gap even if temporarily.” On June 20, the NCLT admitted an insolvency appeal from State Bank of India (SBI) against Jet after the airline repeatedly defaulted on loan repayments.

Slots Allocated on Temporary Basis

Grant Thornton partner Ashish Chhawchharia was appointed insolvency resolution professional for Jet. A person in the know said that while executives from Etihad Airways, the Hinduja Group and the newly formed consortium of UK-based Adi Partners and the airline’s employees have met Chhawchharia, no executive from the Tata Group has approached him yet.

The government has farmed out Jet’s slots to its rivals as its grounding in April has created a shortfall in capacity and fares have soared. The ministry of civil aviation has allowed Jet’s rivals to use its slots till the end of December, around when the NCLT wants the insolvency procedure completed. A new investor will get back the slots if it can get Jet flying again. Jet also has a fleet of 14 planes — mostly wide-bodied Boeing 777s and Airbus 330s. The start of the bankruptcy process has stalled efforts by financers and lessors to repossess Jet’s planes.

“Long before NCLT, the employees and the planes were steadily being depleted from the company,” said an executive. “The government also started reallocating the slots to various airlines. Now very little is left in Jet Airways to buy. Even the international bilateral rights will slip away from an airline that has no aircraft to use them.”

The Tata Group sees demand rising in such a situation, said people with knowledge of the matter.

“We have been requesting our suppliers to hurry up with deliveries,” said one of them. “We are clearly expanding our network aggressively and have also got international rights.”
Tata Sons and Singapore Airlines have infused a combined Rs 900 crore into Vistara in the past few months, bolstering efforts by the carrier to improve its financial health and take delivery of new planes from Airbus SE and Boeing Co. Tata Sons pumped in Rs 459 crore fresh equity by subscribing to two rights issues, one in December and the other in March.
Vistara recently obtained government approval to launch international flights. It currently operates 730 flights a week to 24 cities in the country using a fleet of 23 single-aisle Airbus A320 and six Boeing 737s earlier flown by Jet. The airline has been slow to expand and currently accounts for just 5% of the domestic market. It has approvals to start international operations to Singapore, Bangkok and Dubai. It has stalled plans to start maiden international flights to Colombo after the Easter Sunday blasts in the island-nation.

It plans to add about 60 planes, including 10 Boeing 787 Dreamliners in the next five years through a mix of direct orders, leases and options. The rest will be Airbus A320neos and A321neos.
AirAsia India aims to start international operations by October this year and is looking to fly to Sri Lanka, Thailand and Kuala Lumpur. The airline recently received its 21st plane and aims to take the fleet size to 40 aircraft in a year. It operates 164 daily flights.

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