Mumbai: Jet Airways and Air Sahara have arrived at an amicable settlement, which will now see the two airlines merge without any hitches. The merger now agreed upon involves Jet Airways paying the Sahara Group a sum of Rs1,450 crore, a discount of 34 per cent on the original agreed upon price of Rs2,200 crore.
Post-merger, Jet will command about 33-34 per cent of the domestic market.
With Jet already having paid the Sahara Group Rs500 crore, as part of the original agreement, the terms now agreed upon will see it disburse another Rs400 crore to Sahara by April 20. The balance Rs550 crore will be paid out in four annual, interest-free installments, starting March 30, 2008.
The merger is likely to go on record as the biggest aviation deal in the country until the Air-India and Indian deal comes through. This process has already been set into motion by the Government.
With the amicable settlement, the two sides have now brought a nine-month old dispute to an end. Without a settlement Jet Airways faced the prospect of having to pay a huge compensation in the event an arbitration panel passed a verdict against it.
Similarly, Air Sahara too faced the uncomfortable situation of finding new buyers at a time when the domestic aviation industry is passing through a turbulent phase.
The matter was brought before an arbitration panel of British judge Lord Stein and retired Supreme Court justices SP Bharucha and Jeevan Reddy. The panel approved the terms, as brought before them by the two parties.
Post -settlement, Naresh Goyal, promoter of Jet Airways said, "It is a good deal which will help us.... it's cheaper than the one signed last year." He told reporters that the deal would "bring value to Jet shareholders."
Goyal also mentioned that the net purchase value for the airline would actually be in the vicinity of Rs1,200 crore keeping in mind the fact that Jet will not have to pay interest on the staggered payments.
Meanwhile, Alok Sharma, president of Air Sahara, said the group would get back its airline brand name, assets like helicopters and immovable properties such as offices and buildings that are not located at airports.
"The Air Sahara brand will be returned to the Sahara Group promoters over a period of time," he said, without specifying the time frame. It is likely that Jet will retain the Air Sahara brand for a period of six months.