Jet for renegotiation, Sahara says no
The largest deal in Indian aviation history may not get off the ground due to financial and Govt regulation hitches.india Updated: Mar 23, 2006 21:25 IST
Jet Airways' move to buy out Air Sahara, the largest deal in Indian aviation history, may not get off the ground because of financial problems and hitches caused by government regulations, sources said on Thursday.
With official regulations and likely constraints on operating Air Sahara after the acquisition and other conditions posing problems for Jet Airways, its chief Naresh Goyal has started feeling that the deal is probably not worth it, said the sources familiar with the negotiations.
"He has been renegotiating the deal with the Air Sahara management," said a highly placed source in the aviation industry.
"But Sahara has refused to bring down the cost of the deal," the source said.
The deal was estimated to be worth Rs 23 billion ($500 million).
The sources said Mumbai-based Goyal, who was in Delhi Thursday, spent almost four hours with the Sahara management at a five-star hotel trying to work out the deal. But Sahara apparently turned down his offers.
"Rs 2,300 crore or no deal" is what Air Sahara has been maintaining, said sources close to the airline that is part of the diversified Sahara group.
The government has clearly told Jet Airways that it would have no access to airport parking bays that were allotted to Air Sahara. Also, Jet would not be allowed to use Sahara's flight schedule for its services or to fly to US under its own name on routes allocated to Sahara.
However, amidst Sahara taking a stance of "no renegotiation" and a deadline of March 24 midnight, when the validity of the escrow account facilitating the deal expires, the two sides seem to heading for a "no deal", said sources.
The deal was announced Jan 17 when Jet said it would buy out rival Air Sahara for $500 million. Jet had plans to merge the two airlines post-acquisition and operate a combined fleet of about 90 aircraft under the Jet flagship.