Mumbai: The government has sought Tata Sons Ltd’s help to rescue struggling Jet Airways India Ltd, people familiar with the matter said.

Tata Sons is in talks with the government about a potential haircut to state-run banks on Jet’s loans while Airports Authority of India may forego some of its dues, one of the people said, asking not to be identified as the discussions are private. The Tata Sons’ board is due to deliberate on the matter on Friday, the people said.

A Tata spokesperson declined to comment while an aviation ministry spokesperson did not answer multiple calls and a text message sent to his mobile phone.

Any investment by Tata Sons will catapult the group to the top league of Indian aviation, dominated by budget carrier IndiGo, while providing a lifeline to Jet Airways, which is falling behind on payments to lessors and employees.

A deal that prevents the airline from going bust will save Prime Minister Narendra Modi’s administration, which last month had to oust the board of Infrastructure Leasing & Financial Services Ltd, the embarrassment of staring at a business meltdown ahead of general elections due in May.

Mint first reported on Tuesday that Tata Group is inspecting the books and assets of Jet Airways as part of a potential purchase of a controlling stake in the airline. Saurabh Agrawal, chief financial officer of Tata Sons, and Jet Airways’ founder and chairman Naresh Goyal are leading the discussions, the report said.

A deal with Jet Airways, in which Abu Dhabi’s Etihad Airways PJSC owns a 24% stake, will give Tata Group access to some lucrative assets in the aviation business—landing and parking slots in airports from Bangkok to Amsterdam, a large fleet of aircraft, and an established domestic network.

The potential structure of the deal has not been finalized, the people said. One of the options is to merge Jet Airways with Vistara, an airline venture Tata runs with Singapore Airlines, one person said. However, difference in fleet and brand identity could mean two brands continuing separately, at least initially, the person said.

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Tata Sons also runs a local low-cost airline with Malaysia’s AirAsia Group Bhd. The two existing Tata-operated airlines had a combined market share of 8.2% in September, compared to Jet’s 15.8%.

On Thursday, shares of Jet Airways surged 24.5% on BSE, the most since it listed on stock exchanges in March 2005. The shares have jumped more than 26% since Tuesday when Mint reported that the Tata Group is conducting due diligence on Jet Airways.

Mint was also the first to report on 3 August that Jet Airways was looking to sell a part of the promoters’ stake and has approached investment banks to scout for a buyer.

Two people directly aware of the development told Mint that the board of Tata Sons is scheduled to meet on Friday to likely discuss the terms of a potential transaction.

“The board may discuss the proposed deal structure, including the acquisition of Jet Privilege, the customer loyalty programme of Jet Airways," said one of the two people cited above, requesting anonymity.

Tata Sons chairman N. Chandrasekaran is scheduled to make a presentation to the board, which could deliberate on the options available, including a potential merger with unlisted Vistara, the full-service carrier owned jointly by Tata Sons and Singapore Airlines, and eventually a reverse listing of the airline, the second person said.

A spokesperson for Tata Sons told Mint that the company does not comment on speculation. Jet Airways informed the exchanges on Thursday that there are no discussions or decisions by the board, which would require a disclosure under rules of the Securities and Exchange Board of India.