Jet Airways chairman Naresh Goyal said on Monday Air Sahara and Jet Airways will operate as separate entities and there are no plans to merge the two. Speaking to reporters after announcing the makeover of the Jet Airways, Mr Goyal said Air Sahara will be renamed Jetlite, and positioned as a cross between a low-cost carrier and a full-service airline.
He talked of a "new model" which will have lower costs because of synergies already existing between Jet and Sahara. He said they will be renegotiating prices and sharing training facilities, which will also bring down costs, thereby making this model profitable, Mr Goyal said.
The two airlines together will have around 33 per cent market share in the Indian aviation market after the takeover. The combined revenue would be $2.5 billion in the first quarter of 2008.
On the acquisition of Air Sahara, Mr Goyal said, the deal does not include acquiring Air Sahara’s debts, but will involve acquiring the working capital losses incurred by Air Sahara.
He reiterated that the acquisition cost of Air Sahara would be Rs 1,450 crores. This puts the enterprise value of Air Sahara at Rs 1,250 crores. The payment, he said, would be made in four equal interest-free installments between March 2008 and March 2011. The first installment of Rs 400 crores would be paid by April 20. Jet had, in March last year, paid Rs 500 crores when the deal was announced — that is before it fell through.
Asked about how he would fund the Air Sahara acquisition, Mr Goyal said that Rs 400 crores would be raised from the margin money it placed with the State Bank of India for issuing a Rs 1,500 crores bank guarantee to Air Sahara for freeing the escrow account of the same amount.
Asked whether any of Sahara employees would be rendered redundant, Mr Goyal said that those who will not be absorbed would be absorbed into the Sahara group. "Every useful asset of Air Sahara would be used by Jet such as its staff, landing and traffic rights, infrastructure at airports such as hangars, besides manpower including technical people," he said.
He said the customers too would benefit because if a Jetlite flight gets cancelled or delayed, a passenger can be accommodated on the Jet full-service flight. Mr Goyal said Jet Airways does not plan to cancel Air Sahara’s order for new 737 aircraft, deliveries of which will take place between 2009 and 2011.
"We will negotiate with Boeing for better pricing for the new aircraft," he said.
Courtesy : Asianage.com
He talked of a "new model" which will have lower costs because of synergies already existing between Jet and Sahara. He said they will be renegotiating prices and sharing training facilities, which will also bring down costs, thereby making this model profitable, Mr Goyal said.
The two airlines together will have around 33 per cent market share in the Indian aviation market after the takeover. The combined revenue would be $2.5 billion in the first quarter of 2008.
On the acquisition of Air Sahara, Mr Goyal said, the deal does not include acquiring Air Sahara’s debts, but will involve acquiring the working capital losses incurred by Air Sahara.
He reiterated that the acquisition cost of Air Sahara would be Rs 1,450 crores. This puts the enterprise value of Air Sahara at Rs 1,250 crores. The payment, he said, would be made in four equal interest-free installments between March 2008 and March 2011. The first installment of Rs 400 crores would be paid by April 20. Jet had, in March last year, paid Rs 500 crores when the deal was announced — that is before it fell through.
Asked about how he would fund the Air Sahara acquisition, Mr Goyal said that Rs 400 crores would be raised from the margin money it placed with the State Bank of India for issuing a Rs 1,500 crores bank guarantee to Air Sahara for freeing the escrow account of the same amount.
Asked whether any of Sahara employees would be rendered redundant, Mr Goyal said that those who will not be absorbed would be absorbed into the Sahara group. "Every useful asset of Air Sahara would be used by Jet such as its staff, landing and traffic rights, infrastructure at airports such as hangars, besides manpower including technical people," he said.
He said the customers too would benefit because if a Jetlite flight gets cancelled or delayed, a passenger can be accommodated on the Jet full-service flight. Mr Goyal said Jet Airways does not plan to cancel Air Sahara’s order for new 737 aircraft, deliveries of which will take place between 2009 and 2011.
"We will negotiate with Boeing for better pricing for the new aircraft," he said.
Courtesy : Asianage.com