Jet Airways – Sahara Airlines: Post merger route and fleet rationalistion expected

Venkatachari Jagannathan
19 January 2006

Chennai: In a landmark deal, Jet Airways (India) Ltd has acquired Sahara Airlines Limited for $500 million. The deal was inked on the night of January 18, 2006, by the the respective heads of Jet Airways and Sahara group — Naresh Goyal and Subrato Roy respectively.

The deal will now have to get the sanction of the directorate general of civil aviation. According to a sketchy joint statement issued by the parties to the deal, the purchase price will be paid in cash. Pending regulatory clearances, both the airlines will operate independently.

While Jet Airways has said that it would absorb the required employees, Sahara Airlines has said that no employees would lose their jobs.

The Jet Airways-Sahara Airlines deal has been a much speculated one. Ernst and Young the advisors to Sahara Airlines had valued the company at $760 million. Interestingly, it was Vijay Mallya, the UB group chairman, who after withdrawing from the race for Sahara Airlines announced that Jet Airways might be the other suitor. He was initially looking at the Sahara Airlines to expand his own Kingfisher Airlines, in May 2005.

The acquisition adds 27 aircraft, four helicopters, airport hangars and its route licences. Currently Sahara Airlines connects 24 domestic and four international destinations and has 135 daily flights with 13,900 seats.

What will be interesting to note is the impact of the acquisition on Jet Airways'' fleet expansion programme and the way it will rationalise the routes-international and domestic.