Mumbai, April 10: Nine months after the deal was grounded, Jet Airways is ready to revive its takeover of ailing airline Air Sahara but at a price that will be at least Rs 400 crore less than what it was ready to pay in January 2006.
The Naresh Goyal-promoted airline is set to acquire Air Sahara for anywhere between Rs 1,450 crore and Rs 1,800 crore. Jet had initially offered to pay Rs 2,200 crore for Subroto Roy’s airline.
The Jet-Sahara deal, which was signed on January 19 last year, had lapsed on June 21, 2006, as Jet could not obtain certain regulatory approvals.
Although Air Sahara had then offered to extend the deadline, Jet wasn’t too keen to pursue the deal. This led to a legal battle between the two airlines. Both parties moved courts to stop the other from gaining control of an escrow account in which Jet had parked Rs 1,500 crore to seal the deal.
A three-member arbitration panel, comprising British judge Lord Stein and retired Supreme Court judges S.P. Bharucha and Jeevan Reddy, which held hearings in January, had deferred a final decision to this month.
Sources said the efforts to reach a settlement were made even as the arbitration hearings continued. It is believed that Jet Airways made the overture for a settlement.
Although details of the acquisition price will only be known tomorrow, sources close to both the airlines indicated it to be in the region of Rs 1,450-Rs 1,800 crore. The sources said Jet may have had its own “legal compulsions” in buying out Air Sahara.
“If it had lost the arbitration hearing, the airline (Jet) may have had to pay a heavy compensation to Air Sahara, which could have been even more than Rs 1,800 crore. On the other hand, if Air Sahara had not responded positively, it would have to go through the tedious process of again looking out for a buyer and the consideration that it may have got, could have been less than Rs 1,800 crore,” said one observer.
It is learnt that Jet will initially pay a fixed price and the rest could be paid in instalments over a four-year period.
Jet has a fleet of 62 aircraft while Air Sahara operates 27 planes.
Both airlines have seen their market shares dip over the past year due to increased competition from low-cost carriers and entrants like Kingfisher Airlines.