News: Jet-Sahara - Look at the fineprint, it’s the same price

(DNA 13/04/2007) Mumbai - In June 2006, when Jet Airways abruptly pulled out of the acquisition deal with Air Sahara, it was Alok Sharma, president of the Subroto Roy-promoted airline, who kept the airline airborne. Thursday, he spoke to Praveena Sharma after a deal was signed. Sharma spoke on the valuation, his future and the impact of the deal on the industry. Excerpts How has the deal shaped out? We are happy with the enterprise value (EV) of Air Sahara. The EV on the 'where-is’ basis (current state of the airline including all liabilities and assets except for helicopter and some immovable properties) works out to around Rs 2,000 crore. If you look at the fineprint, the price that Jet paid is much the same they quoted last year. How do you view this deal? It’s a win-win for both Jet and Air Sahara. You will see the contours of the game change in another eight months or so and deal will prove beneficial for Jet. I firmly believe Jet will gain immensely from this. Why did Air Sahara settle for staggered payment? There was some concession that could have been offered to Jet. So we agreed to the staggered payout of Rs 550 crore. What about the talk of Jet converting Air Sahara into its low-cost subsidiary? would have continued to run Air Sahara as a full-service airline. According to me, it should remain as a full service carrier. Do you think we will have a seller’s market following this merger? Let me tell you this deal is very good for country, the aviation industry, consumers and promoters of both airlines (Jet and Sahara). It is unlikely that we will have a seller’s market for some time because of the industry is operating at 69% capacity. So we will continue be buyer’s market for some more time. However, this move (Jet-Sahara merger) is a step in the right direction for better health of the industry. Would you continue to be on the board of Air Sahara after the acquisition? It is one thing me and my wife have been talking about. I have yet to take a decision on that. It would depend on what I want to do, there is no rush. There are enough opportunities in the Indian economy.