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Hindujas get backing of Etihad, Naresh Goyal to board Jet

The Hinduja Group has engaged investment bankers led by SBI Capital Markets for due diligence.

Updated: May 22, 2019, 10.14 AM IST
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MUMBAI: The Hinduja Group will start the process of bidding for Jet Airways this week, having obtained the assent of key stakeholders in the grounded airline including founder Naresh Goyal and Etihad Airways, strategic investor in the carrier.

The Hinduja Group has engaged investment bankers led by SBI Capital Markets for due diligence, which will commence soon, said people with knowledge of the matter.

Sources close to Naresh Goyal and the Hindujas said they share cordial ties that go back more than two decades. They said the Hindujas expect the banks to take a sizeable haircut—initial calculations peg Jet’s dues at Rs 12,000 crore.

India’s leading conglomerates had declined approaches by Jet’s banks and Goyal for a possible rescue. The Tata Group had shown an inclination to consider a bid for the airline but subsequently lost interest, said the people cited above. The Hinduja Group had in the past eyed Air India when the state-run, heavily indebted airline came up for privatisation. It had also tied up with Lufthansa AirCargo for services between Sharjah and India in 1997-2000.

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Several Levels of Due Diligence
Jet is running out of time as its pilots are being hired by rivals in India and abroad.

Apart from that, its much-coveted overseas routes are being eyed by rival airlines. The aviation regulator has handed over some of its domestic routes to rivals temporarily. ET reported on Monday that Air India has been given half of Jet’s busiest overseas routes with the rest to be shared out among domestic carriers, also on a temporary basis, pending Jet’s possible revival.

To be sure, it’s not at all certain that Jet has found a saviour yet, said a person close to the development. “Any investor will have to wade through several levels of due diligence,” he said. “Without the audited financial results, no investor can be sure of the gaping hole that is Jet’s accounts at this point.”

At least 30 Jet commanders flying long-haul, wide-bodied aircraft have applied to Turkish, Korean Air, Qatar Airways and Rwanda Air for jobs, said people with knowledge of the matter. Closer home, IndiGo has hired over 30 Jet pilots who flew Boeing 737s. The pilots will be inducted after training on IndiGo’s Airbus 320s, sources said. IndiGo had offered Rs 15-20 lakh as sign-on bonus for Jet Airways pilots for a limited period of time.

Anyone looking to revive the carrier will have to start from scratch, since the top management at Jet has quit. The support of Goyal and Etihad is therefore crucial, said the people cited above. The Hinduja Group will also gauge the level of support from the government and bankers for a revival plan before making a final move. Another aspect of the Hinduja Group is that their acquisitions are predicated on gaining majority control.

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