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Jet Airways buys out Air Sahara
Aiming to become the single largest aviation player, Jet Airways on Thursday announced a deal to take over Sahara Airlines for Rs 2,300 crore in an all cash deal, a move that would help it garner up to 45 per cent domestic market share. Sahara India confirmed that workers would "not lose their jobs.
Aiming to become the single largest aviation player, Jet Airways on Thursday announced a deal to take over Sahara Airlines for Rs 2,300 crore (about $500 million) in an all cash deal, a move that would help it garner up to 45 per cent domestic market share.
Announcing the deal through a joint statement, Jet Airways Chairman Naresh Goyal and Sahara India chief Subrata Roy said that an all inclusive cash deal was executed on Wednesday night and is subject to regulatory approvals.
"Jet Airways India Ltd and Sahara Airlines Ltd are pleased to announce the execution of a share purchase agreement for acquisition by Jet AI of the entire capital of the Sahara Airlines Ltd subject to regulatory approvals," they said in the statement issued.
Immediately after the joint statement, Goyal said in Mumbai that while no liability would be transferred to Jet's balance sheet, the issue of international flying rights to his company would be subject to regulatory approvals.
Stating that the deal would help Jet increase its market share from current level of 35 per cent to 40-45 per cent, Goyal said that absorption of staff from Sahara would be only on 'merit basis'.
Sahara India confirmed that workers would "not lose their jobs... And gross emoluments will be unaffected. Upon closure of the transaction, based on requirements and performance, Jet Airways shall absorb suitable employees."
As part of the deal, Sahara's assets including infrastructure and parking slot facilities in the country would now be owned by Jet.
On the issue of price war in the aviation sector, Goyal categorically stated, "we are not planning to make it (Sahara Airlines) any low-cost carrier."
Assuring maximum benefits to the shareholders, Goyal said due to economies of scale the cost of operations would go down substantially leading to improved revenues and profitability.
On source of funding the takeover deal, Goyal said all cash would come from internal accruals.
Goyal also said that his company would approach the regulatory authority for merging the Air Sahara brand with the parent company.
The existing agreements between Air Sahara and its clients/customers would be reviewed by Jet Airways.
Sahara offers to protect jobs of unabsorbed staff
Aimed at ensuring a smooth buyout of Air Sahara by Jet Airways, Sahara Group Chairman Subrata Roy on Thursday assured full job protection, along with emoluments and perks, to the employees who do not find a place with the new owners.
"If the employees find it difficult to work under the new management, Sahara India Pariwar, in the spirit of true Pariwar (family) shall be responsive to any of their genuine difficulties and would take all steps... To mitigate their difficulties," Roy said in an internal communication to Air Sahara employees within hours of Jet striking a deal to acquire his company for $500 million.
"All the pilots, co-pilots and other engineering/ technical staff shall continue with Sahara Airlines Ltd since they possess industry specific skill set... They are unlikely to have any difficulty in continuing with their current job."
Other workers in the aviation business would be taken over by the group on the same terms, conditions and rank before the induction of the new management, Roy said.
The Sahara group said it believed that none of its workers should feel insecure about their jobs and offered to put employees, who wanted to pursue a career in the aviation industry, back on assignment to Sahara Airline Ltd.
Over the next three months time, in case they wish to continue with the new management, they would be provided re-employment on mutually agreed terms and conditions.
"Alternatively, if the workers wish to come back to Sahara... Or the assignment is terminated... They will be given suitable job responsibilities in any of the entities of the group, commensurate with their skill sets."
Jet to fund acquisition through internal resources
Jet Airways said it will fund the Rs 2,300 crore Air Sahara acquisitions through its internal resources, even as its board is scheduled to meet on January 21 to consider raising funds.
"We are going to raise funds from our own resources. At present, we have no plans for further dilution of shares," Jet Airways Chairman Naresh Goyal said.
Jet has called a meeting of its board of directors on January 21 to consider raising funds through an equity or debt instrument, besides for considering its third quarter results.
Referring to the liabilities of Air Sahara, he said Jet will not take any of them.
"Liabilities are their problems.. I am not going to take any liability through this acquisition.. I am taking the airline business only..," Goyal said.
The airline had appointed a special integration team for the complete implementation of the merger, he said.
"We have appointed a team for the implementation of the merger. The consolidation of the airlines will take place after getting approvals from the necessary regulatory bodies," he said.
The airline which had a 46 per cent market share on a stand alone basis three years before, and came down below 40 per cent after the emergence of no-frills airlines and competition from other carriers expects to increase the market share to 45 per cent with the acquisition.
