Kingfisher Airlines bids to take over Air Sahara

30 November 2005

New Delhi: The bidding for Air Sahara closed a couple of days ago on Monday November 28. Two airlines and a private equity firm have reportedly put in their bids to buy out the bleeding airline.

Kingfisher Airlines has reportedly put in a bid for a 100 per cent stake in Sahara Airlines. The Naresh Goyal-promoted Jet Airways, which has been denying reports about its interest in Sahara, is believed to have picked up the bid document, and is seriously examining it.

UB chief Vijay Mallya, who floated Kingfisher Airlines, has been having problems with the valuation of Air Sahara. The bidding for the latter was to have been completed by end October. However, the bidding process received a jolt when Mallya raised objections saying, "The valuation expectation communicated by Ernst & Young is in our judgment very excessive."

Air Sahara has been valued at between $750 million to $1 billion by auditing firm Ernst & Young. Last month Kingfisher Airline, in a communication to Sahara, said it wanted to carry out its own due diligence, as it did not agree with the valuation by Ernst & Young.

After this episode, a Kingfisher Airline official said the plan to acquire a stake in Sahara Airlines was no longer high on the UB Group''s list. He said it did not seem a good proposition any longer to buy a stake in an airline which may not bring value to the company.

Air Sahara, which launched operations in 1993, has a fleet of 26 aircraft and operates on international routes like Singapore and Sri Lanka and has a code sharing agreement with American Airlines.