India's second largest private airline Jet Airways, facing a loan default this month, may return to the negotiating table with the Tata Group.
The cash-strapped carrier had held talks with the Indian conglomerate in November that sources say have remained inconclusive. One of the sticking points, according to the sources, has been the demand for Jet founder and chairman Naresh Goyal to step down.
Goyal has been in discussion with UAE national carrier Etihad Airways but talks have stalledover the issues of Goyal's management role and the immediate cash infusion required to keep the airline airborne. The foreign carrier already has a 24 per cent stake in Jet.
Tata has acknowledged "preliminary" talks with Jet Airways, but claims there has been no proposal made.
Acquiring Jet Airways business will give Tata's fledgeling aviation unit a shot at catching up with India's largest carrier IndiGo of InterGlobe Aviation. India is one of the fastest-growing major air-travel markets of the world. But, a raging price war among the airlines has been eating away the margins.
Jet reported its third straight quarterly loss in November amid surging liabilities. The airline had been delaying payments to staff and lessors.
An earlier report said Goyal and Tony Douglas, Etihad chief executive officer, met State Bank of India Chairman Rajnish Kumar a number of times to explore the possibility of a cash infusion.
Indian lenders were prepared to advance up to $500 million to Jet Airways provided Etihad injected a similar amount into the company, reports said. They were still examining the airline's books.
Though the initial contact did not amount to much, the Tata Group, which owns carrier Vistara along with Singapore International Airlines and has a majority stake in Air Asia India, has been in touch on the progress of discussions involving Etihad and the banks.
Jet missed interest and principal repayment by December, giving it about 90 days to clear the dues and avoid becoming a non-performing asset, a report in Business Standard says. Credit assessor ICRA Ltd has cut ratings on Jet Airways' loans and bonds to D, a score that denotes default or threat to default soon.
Aviation circles are watching keenly whether Jet will go the way of Kingfisher Airlines, founded by beer baron Vijay Mallya, which stopped flying in 2012 under a mounting burden of unpaid dues to lenders, staff, lessors and airports. Another airline SpiceJet almost got grounded in 2014 prompting its founders to return to the rudder and steady the ship.