Nothing official about it: Jet to buy Sahara for Rs 1,850 crore

MUMBAI/NEW DELHI: There is nothing official about it as yet but Jet Airways is understood to have struck a deal to revive the takeover of Air Sahara, nearly nine months after calling it off.

The agreement, which was reportedly reached during the final arbitration hearings in Mumbai, valued the deal at Rs 1,850 crore.

The amount is less than Rs 350 crore which Jet had offered to pay in January 2006.

Aviation experts were abuzz on Tuesday that Jet is offering less amount to account for creditors' dues. Jet has already paid Rs 680 crore to Sahara -- Rs 180 crore for reviving the airline and Rs 500 crore as bank guarantee.

When contacted, a Sahara spokesperson declined to comment, saying the talks were on through the arbitration panel. Jet's chairman Naresh Goyal, emerging from the arbitration hearing, also declined to comment, saying the matter is sub-judice.

Jet's counsel told reporters that the arbitration order is expected on Wednesday. He did not divulge further details.

The three-member arbitration panel, comprising British judge Lord Stein, retired Supreme Court judges Justice SP Bharucha and Justice Jeevan Reddy, told both the parties to talk and resolve differences. The final details of the agreement and modalities of payment are yet to be worked out.

While arbitration hearings are on from September 9 last year on the directions of Supreme Court, the panel is now set dispose the matter.

The Jet-Sahara deal, which was signed on January 19 last year, had lapsed six months later on June 21 consequent to the alleged failure of the Naresh Goyal-promoted carrier to secure regulatory approvals.

Though Sahara had then offered to extend the deadline, Jet was not to keen on it as it was understood to be haggling for a 10-20 per cent price cut.

Last week, on a petition filed by Jet, the Bombay High Court had issued notice to the Centre to respond to the airline's plea that documents related to the failed deal, including those on security clearance and internal notes, be produced.

Shortly after the deal crashed last year, Lucknow-based Sahara Group submitted before a local court that despite expiry of the deadline, it was still valid. In the meantime, Jet too had filed an arbitration petition in the Bombay High Court seeking to restrain Sahara from withdrawing Rs1,500 crore it had deposited in the escrow account.

The deal would create the largest Indian private carrier with a fleet size of about 90 aircraft and give control of nearly 42 per cent of the domestic market.

It is a tricky situation for Jet, which has a wide range of network in India and it is looking for expansion in a major way as far as the global operations are concerned. Experts say that it would have been better for both Jet and Air Sahara if they had merged before one year.

But at present, there is lot of competition and so it will be really tough going. A proposed merger of government-owned Air India and Indian is also expected to be complete shortly.

Air Sahara, whose parent Sahara Group had decided to exit the aviation business, had earlier been courted by Kingfisher Airlines but a deal could not materialise due to differences over valuation.