Our Bureau

New Delhi, Jan. 11

AIR Sahara and Jet Airways are in talks to form a "strategic alliance" although no formal decision has yet been taken on moving the process forward, according to the Executive Vice-President of Air Sahara, Mr Alok Sharma.

"We have not signed any deal with Jet Airways. We are constantly in negotiations and discussions.

"The contours of the discussions will be revealed as they progress," Mr Sharma said, scotching rumours that a deal between the two airlines was to be inked today.

Air Sahara, he added, has drawn up an ambitious expansion plan that it realises can be achieved through consolidation.

"With this pursuit in mind, we are talking to Jet Airways so that we can work together for a better tomorrow," he said, without divulging details of the ongoing negotiations.

Airline officials refused to say whether they were in talks with any other financial institution or airline at the moment for forming a strategic alliance.

When asked why the airline was in talks only with Jet Airways, Mr Sharma said: "There is a lot of commonality between the two airlines. We are both full service airlines, the kind of aircraft that both operate are similar, and both of us are permitted to fly abroad."

Similarly, a spokesperson of Jet Airways only confirmed that the airline was in talks with Air Sahara.

"The advisors are working out the relevant issues. No conclusive decision has been reached as yet," a senior Jet Airways official said.

Sources indicated that the talks, which have been ongoing for some time, hinge on three major issues - pricing, branding and management control.

Senior officials of the two airlines have been meeting with one another for some time now for inking an agreement.

Air Sahara has been looking for a strategic partner since late last year. In September, Air Sahara announced that initial estimates by Ernst & Young had put the airline's enterprise value between $750 million and $1 billion.

A host of domestic airlines had shown an interest in picking up a stake in Air Sahara, including SpiceJet and Kingfisher.

However, both the airlines withdrew from the race.

(This article was published in the Business Line print edition dated January 12, 2006)
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