The Hindu Business Line : Air Sahara will be renamed Jetlite

NEW BRAND: Mr Naresh Goyal, Chairman, Jet Airways, and Mr Harish Salve, company's counsel, addressing a press conference in Mumbai on Monday. — Paul Noronha

Mumbai April 16 Within 2-3 weeks, the Air Sahara brand will disappear from the Indian skies and its place will be taken over by a new brand, Jetlite.

And this brand will, for the first time in India, offer a new business model that will be somewhere between the existing low-cost and full-service models.

These are the main plans of Jet Airways for Air Sahara, which is being acquired for Rs 1,450 crore.

When it first agreed to acquire Sahara last year, Jet Airways had plans to merge the two airlines into one entity. Now, it intends to run Jetlite independently as a 100 per cent subsidiary.

Speaking to newspersons on Monday, Mr Naresh Goyal, Chairman of Jet Airways, made it clear that Jet Airways would continue to operate as a full-service airline, while its new subsidiary would be based on the model of being higher than a low-cost airline and below a full-service one.

The transaction is expected to close by April 20, 2007.

According to Mr Goyal, the airline had just received clearance for renaming Air Sahara as Jetlite and the process of repositioning the brand would be wrapped up in 2-3 weeks.

In response to a question, he said that the balance sheet of the new subsidiary would be consolidated with Jet's balance sheet for the period between April 20, 2007 and March 31, 2008.

He was not willing to talk about the financial health of Air Sahara. "The past does not concern us, we are looking at the future. We aim to turn around the airline in the first year of operation."

Jet is betting on its ability to bring down the per-unit cost of the new subsidiary through synergies between the two airlines.

It is confident of deriving cost savings and improved productivity benefits from economies of scale and common facilities, including training, airport handling, finance and administrative facilities.

How will Jet fund the Sahara acquisition and take care of the expansion plans of both the entities? Mr Saroj Dutta, Executive Director, said that funding of the acquisition has already been taken care of.

"Of the Rs 1,450 crore, Rs 500 crore has already been paid (last year, when Jet first agreed to take over Air Sahara). Another Rs 500 crore has been placed as margin money through issue of a bank guarantee of Rs 1,500 crore. The rest is to be paid in four equal annual instalments, which we intend to do through internal accruals. The acquisition will not strain our cash flows."

Jet, on its own, plans to raise up to $400 million equity capital in the next few months.

Jet is also acquiring 30 aircraft for $2.5 billion; 20 wide-bodies aircraft, which will be used for its international expansion plans, are expected to join its fleet between now and October 2007. Another 10 B737 aircraft are in the process of being delivered.

Answering questions related to HR issues, Mr Goyal said that Jet would take over employees in the categories of pilots, maintenance personnel and cabin crew.

"While some of the other employees will also be taken over, the rest would be absorbed in the Sahara Parivar, as per the agreement. Both of us have firmly resolved that there would be no retrenchment in the acquisition process," he added.

On how Jet was planning to equalise salary levels across the two airlines, he only said that the average salary levels of employees of the two carriers were as per industry standards.

More Stories on : Airlines | Mergers & Acquisitions | Jet Airways (India) Ltd

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Air Sahara will be renamed Jetlite

`Sahara was enterprise-valued'

Air Mauritius plans flights to Bangalore

Non-metro airports: Govt to select partners by year-end

DHL launches trade advisory services

Navigation congress sets up regional groups

Chittaranjan Works targets 1,000 electric locos in 11th Plan

Rlys, NTPC may ink pact for Nabinagar plant soon

Wagons underutilised at East Coast Rly's Waltair division

SW Rly records 12% growth in freight loading