Jet Airways chairman Naresh Goyal (centre) with legal adviser Harish Salve (left) and Rajesh Chaturvedi in Mumbai on Monday. (PTI)

Mumbai, April 16: Naresh Goyal, head honcho at Jet Airways, plans to reposition Air Sahara to turn the loss-making airline into a profitable acquisition.

Air Sahara, which will be renamed as Jetlite, will be sandwiched between low-cost carriers like Air Deccan, SpiceJet and IndiGo and full-service airlines like Jet Airways and Kingfisher. Air Sahara has been bleeding badly ever since it started aggressively undercutting low-cost airlines.

Goyal told reporters here today that he was hoping to turn Jetlite into a profitable operation from the next fiscal. He claimed Air Sahara could be repositioned into a new niche because of the cost savings from the buyout.

Jetlite will be rationalised with a healthy mix of leased and acquired planes and the access to skilled personnel such as pilots and engineers who are in short supply in the country.

Goyal expects to trim costs as the two airlines will use common facilities and resources. “We will also be renegotiating prices (of consumables) which will also bring down costs,” Goyal added.

While re-positioning Air Sahara, Jet plans to mimic successful models of other airlines such as South West and Jet Blue.

Jetlite will operate as a 100 per cet subsidiary of Jet Airways. Jet and Air Sahara are the only two private airlines in the country with the rights to fly to overseas destinations.

The Sahara group had stopped flights between Delhi and London because of daunting costs and Jet Airways will decide soon whether or not to resume operations.

Jet Airways plans to raise around $400 million to fund its international expansion plans for which it is taking deliveries of 20wide-bodied aircraft between April and October this year.

Meanwhile, Jet today unveiled a new corporate identity and brand mark as it prepares to increase its presence in international markets.

At present, Air Sahara has only leased aircraft in its fleet and forks out Rs 310 crore in annual lease rentals. Jet Airways now intends to review the agreements. Air Sahara now has 24 aircraft in its fleet with an average age of eight years. Goyal said Jet Airways wouldn’t face any cash flow problems in funding the buyout. It had paid the Sahara group Rs 500 crore in March last year. In addition, it had placed Rs 500 crore as margin money for the issue of bank guarantees worth Rs 1500 crore to Air Sahara. The margin money will now be used to stump up the Rs 400 crore that becomes payable on April 20. After that, Jet will need to make four annual, interest-free payments that start from March 2008 for a total of Rs 550 crore which will come out of internal resources.

Senior company officials indicated that this amount could go up after the Air Sahara acquisition as the latter needs to be “recapitalised”.

The acquisition of loss-making Air Sahara could provide a tax shield to Jet Airways as it might be able to set off a part of its profits against the former’s losses.