April 12, 2007

Jet Airways reaches an agreement with Air Sahara to revive a merger deal

Nine months after lapsing its proposal to take over Air Sahara, Jet Airways has revived its bid. The deal fell through last year amid procedural delays and price differences.

According to AP, a three-member arbitration panel, set up to resolve the dispute between the two airlines over last year’s merger collapse, will announce a new agreement on Wednesday, said Rustom Gagrot, a lawyer representing Jet Airways. Gagrot declined to comment on the financial details of the new deal.

Jet Airways offered US$500 million to acquire Air Sahara last year.

After the deal failed to get regulatory approvals, Jet said last June it had decided not to pursue the acquisition for commercial reasons and in the interest of its shareholders. Sahara had argued that the deal should have been completed, and asked for compensation.

Jet will likely pay about 18 billion rupees (US$420 million) for the acquisition, the Press Trust of India said, citing unnamed sources. Its also been reported if the deal goes through, it would create an airline controlling nearly half of India’s domestic aviation market. The combined airline would have a fleet of 89 jets.

The booming market recently witnessed a major consolidation in the form of Air India and Indian merger.

The finalisation of the merger of the two state-owned carriers, Air India and Indian Airline, is being termed as a critical development in the Indian aviation industry. LCCs currently have a market share of 35 percent as per the data based for November 2006 and it is estimated that LCCs will reach a market share of 70 percent by 2010.

Source: www.eyefortravel.com

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