Jet may have paid high for extra market share | india | Hindustan Times
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Jet may have paid high for extra market share

Naresh Goyal has got Air Sahara 40 per cent cheaper than the original price of Rs 2,300 crore, reports Indulal PM.

india Updated: Apr 13, 2007 01:28 IST
Indulal PM

Naresh Goyal has got Air Sahara 40 per cent cheaper than the original price of Rs 2,300 crore. But neither Jet Airways nor Air Sahara stands to benefit from the deal. Because, valuations in the aviation industry have gone for a six since time the airlines signed the original agreement last year. The consistent increase in aviation fuel prices and the mushrooming of budget airlines have made the aviation business non-profitable.

Investment banking sources said the deal was not cheap. "Though the valuation they are talking about is Rs 1,450 crore, the actual valuation will be well above Rs 1,900 crore, considering the Rs 275 crore creditors’ deduction and other interests and arrears," the sources said.

"Jet Airways has bought over some competition and nothing more than that," said Arun Kejriwal of Kris Research. "The infrastructure for which Jet Airways has paid the price is not very valuable since parking bays come with the aircraft," he added.

According to the revised commercial agreement, which was approved by a three-member arbitration panel, Jet Airways had already paid Rs 500 crore, while Rs 400 crore will be paid to Air Sahara before April 20 and the remaining Rs 550 crore in four interest-free annual equal instalments beginning on or before March 30, 2008.