March 20: The top brass of Jet Airways went into a huddle in Mumbai today sparking rumours that the Rs 2,200-crore Jet-Sahara merger deal that was announced with a lot of fanfare in January had started to unravel with no sign of government approvals just three days before the expiry of the deadline set in the agreement.
Jet officials emerged from the meeting at chairman Naresh Goyal’s residence at Jupiter Apartments in south Mumbai and were gung-ho that the deal would go through. They said they would be holding talks with the Sahara group to extend the deadline ' possibly by another 60 days.
The Jet-Sahara deal had sparked a major controversy within the aviation industry with dark accusations that the civil aviation ministry was favouring the creation of a private monopoly that would hog airport infrastructure and flight operation rights.
The tenure of the escrow account (specially created for the purchase of Air Sahara) expires on March 24. Jet Airways, therefore, will have to either obtain necessary government approvals before March 24 or extend the agreement with Air Sahara. The buyout would not only give Jet Airways a market share of 50 per cent, but also yield 27 leased aircraft, around 134 daily flights, 24 domestic destinations, and close to 14,000 passengers, which Sahara flies on a daily basis.
Saroj Datta, executive director of Jet Airways, told The Telegraph that both the parties would meet over the next couple of days to decide on the course of action. “We are waiting for the government’s approval on the share purchase agreement. We will be meeting over the next couple of days to decide what has to be done. However, the deal is intact.”
Despite Jet officials’ confidence that they would wrap up the deal, some niggling doubts remained with sources saying that the two companies had still not been able to thrash out the differences between them and were locked in eleventh-hour discussions.
Sources said the bone of contention was the huge liabilities of Air Sahara which Jet was unwilling to take on board. There are also problems related to Air Sahara’s airport infrastructure automatically being transferred to Jet Airways.
The civil aviation ministry will decide on the parking slots and flight operation rights only after examining the merged entity’s operational schedule. According to civil aviation ministry officials, the infrastructure belongs to the Airports Authority of India and is given to airlines based on air traffic and aircraft movement.
The Director General of Civil Aviation (DGCA) has said a new policy will have to be devised to decide on such issues as more mergers could take place in future. The issue of a hefty transfer fee is also under consideration.
Under an alternative formula being considered, the AAI will take back all the parking bays of Air Sahara and redistribute them among all carriers with a substantial percentage going to Jet.
Jet's proposed $500-million issue of foreign currency convertible bonds to part fund the acquisition is understood to have been deferred by about two months till May.
There is also the question of taking approval from the aircraft acquisition committee, which allows domestic carriers to acquire planes, for transferring Air Sahara's aircraft to its own fleet.
Jet may also be asked to redraw its routes to meet the mandatory requirement of flying on smaller routes.
Civil aviation minister Praful Patel had said in Parliament that nearly two months after striking the deal, Jet had still not informed the government about the buyout.
After the deal was announced on January 19 and an integration committee headed by Air Sahara CEO Ronojoy Dutta was set up, Jet Airways had recently started the process of taking Sahara staffers on its rolls.