The Hindu Business Line : Kingfisher Airline looking to pick up stake in Air Sahara

A senior official of Kingfisher Airline said that the airline had received the information memorandum for private equity placement and was studying it.

Industry sources indicated that almost all major domestic airlines, including Spice Jet and Jet Airways, were keen to invest in Air Sahara.

"Most airlines have met with officials of Air Sahara. However, no decision has been reached as yet," sources said. Among the issues that were said to be hampering the deal being closed was the stated huge difference between the initial `enterprise value' of $750 million and $1 billion by Ernst & Young, and the offers that have been received.

In late-September, Air Sahara had issued a statement that it was exploring opportunities for additional investment to fund its expansion plans. It had appointed Ernst & Young to look into several issues including being an advisor for business plan validation. Besides, the consulting firm was also mandated to study the valuation and fund mobilisation through strategic partners for private equity placement.

The airline currently operates with a fleet of 26 leased aircraft to 25 destinations offering 123 flights-a-day, which it hopes to increase to 140 flights-a-day by November this year.

Meanwhile, Air Sahara said on Monday that it had "not concluded" any negotiations or finalised any particular deal yet. "All options on the future funding and strategic alliances are open. We will find and finalise on any option that is best suited for the current and future interest of the airline," Air Sahara statement adds.

In a notice to the stock exchanges on Monday, Jet Airways also denied that it was close to finalising a deal to pick up a stake in Air Sahara. Despite the domestic aviation sector growing at a fast rate, the revenue yields of the airlines are said to be under tremendous pressure.

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