Vijay Mallya, the flamboyant boss of low-cost carrier Kingfisher Airlines, has once again entered the fray to acquire Air Sahara whose deal with rival Jet Airways has run into rough weather, officials said on Wednesday.
Senior executives of Bangalore-based UB group, controlled by Mallya, have been directed to negotiate with the Subrata Roy-managed Sahara group, even as last minute talks are underway with Jet Airways to salvage the deal, officials added.
Jet Airways had said on Tuesday it was still awaiting government clearances to buy rival Air Sahara for what was originally negotiated at $550 billion -- touted as India's largest acquisition in aviation industry.
The buy-out pact between the two airlines -- under which Jet had paid an advance of Rs.5 billion into an escrow account to keep the mega deal going - ends at midnight on Wednesday.
"It would make sense for Kingfisher to acquire Air Sahara since it would give the carrier access to overseas markets. Kingfisher has ordered some wide-bodied aircraft and needs overseas access to deploy them," an industry analyst said.
As per India's regulations, only Air Sahara and Jet Airways, among the private carriers, have the permission to operate international routes.
Mallya himself had said last week that he had written to the government, asking it to review its policy of a five-year moratorium on new carriers before flying abroad, saying it was unfair.
"I hope that the government will consider my application. If the government, for whatever reason, is unable to review the policy, I have made alternative plans," the Kingfisher chairman had said.
Mallya has already company incorporated in the US -- Kingfisher International Airlines -- in which he holds a 25-per cent stake.
Air Sahara had said in September last year that it was looking at opportunities for alliances and partnerships to fund expansion and that its advisers Ernst and Young had put its enterprise value at $750 million to $1 billion.
Following this, many potential suitors had stepped forward to strike a deal with Air Sahara, including UB group, which had estimated the airline's worth at $600 million.
Officials explained the proposal had called for UB group paying $200 million upfront in cash, the retention of stake worth another $200 million by the Air Sahara promoters and raising the remaining amount by way of a public issue.
But UB was out of the race since Sahara favoured the entire amount in cash and Jet Airways was willing to assure that.
Air Sahara, which began operations just months after Jet in 1993, is part of the $12 billion Sahara Pariwar group led by Roy and has interests in areas spanning para-banking, finance, housing, power and media.
UB group has interests in liquor and airline industries.