Naresh Goyal, promoter of the troubled Indian airline Jet Airways, is understood to have approached M A Yusuffali, chairman and managing director of UAE-based retail giant Lulu Group International, to invest in the ailing carrier.
Goyal is understood to have opened the channel of discussions with Yusuffali, in parallel with his on-going negotiations with Abu Dhabi-based Etihad Airways to increase the latter’s stake in Jet Airways from the existing 24 percent to 49 percent, according to Indian media reports.
Jet Airways’ efforts to entice an Indian investor in the airline is due to the Indian foreign direct investment rule that does not allow a foreign airline or foreign investor to have management control of an Indian airline.
Yusuffali, however, told Economic Times that he has no interest in acquiring stake in an airline and that he was focused on his investments in retail and hospitality.
A leading businessman from Kerala, who also has business interests in UAE and knows Yusuffali well, told Arabian Business that there is a strong possibility of the Lulu Group owner considering the option of joining the board of the Jet Airways management as this could propel him to prominence nationally in India, without having to make any major investment in the airline.
Yusuffali has made investments in two airport ventures in India – Cochin International Airports Ltd (CIAL) and the new Kannur International Airport Ltd (KIAL), both in the southern state of Kerala. He had also previously served on the board of India’s national carrier Air India.
A Jet Airways spokesperson said the company does not comment on speculation.
“Some of the short-term and long-term borrowings of Jet Airways will be due for repayment soon and Jet will have to somehow rope in investors urgently if it has to raise resources for meeting the payment obligations. A default on loan repayment to banks will make the situation much worse for getting a suitable partner,” an aviation industry analyst said.
India’s ICRA has already put Jet Airway’s credit rating under review in view of the fast approaching loan repayment schedules of the airline and concern over its ability to meet its repayment obligations.
A senior executive at ICRA told Arabian Business last week that there was a strong possibility of the credit rating agency downgrading Jet’s rating from the existing B with a negative outlook for long term and A4 for short-term outlook.
Jet Airways recently appointed RBSA Advisors to carry out a valuation of the company. Sources said this is being done as a precursor to the airline firming up a financial deal with either Etihad and or other prospective investors.
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