Little hope for Jet-Sahara deal

The denial of security clearance by the Union home ministry to Jet Airways chairman Naresh Goyal for membership of the reconstituted board of Air Sahara, the feeling at Jet Airways that the Jet-Sahara deal is economically unviable and the resignation of Air Sahara CEO Rono Dutta a few days ago are all plausible reasons for why the Rs 2,300-crore purchase of Air Sahara by Jet Airways may not materialise.

The deal once again is in the spotlight since the validity of the share-purchase agreement and the Escrow account signed between Jet and Sahara is set to expire on June 22, three months after it was extended in March this year. The mega Jet-Sahara deal, which was signed in January this year, was hailed as the biggest deal in Indian civil aviation history then but things have gone horribly wrong since then. Air Sahara CEO Rono Dutta, who was heading the integration team to facilitate the takeover, quit recently as he was unhappy over the state of affairs.

In a terse press statement on Tuesday, the airline stated, "Jet Airways wishes to clarify that it is still awaiting all the regulatory approvals and the fulfilment of all conditions." Jet is believed to be of the view that the deal should be called off if the security clearance for Mr Goyal is not obtained by June 22.

But what must be rankling Jet Airways more is that while its chairman has so far failed to receive the home ministry clearance, four senior Jet officials namely Saroj Dutta, Vijay Kelkar, Javed Akhtar and Victoriano Dunca recently received home ministry clearance to become members of the reconstituted Air Sahara Board.

Last year, a US-based airline had objected to Jet Airways seeking permission to fly to the United States and had filed a complaint with US authorities alleging that the airline had links which could be detrimental to the security interests of the US. Jet denied the allegations. Speculation is mounting whether the lack of security clearance to Mr Goyal has anything to do with the complaints filed in the US against Jet.

Though Jet Airways has taken the view that lack of security clearance to its chairman is the major irritant in the deal coming through, the real reason, industry insiders say is that Jet has become convinced that the Rs 2,300-crore deal may prove to be too expensive for it.

Air Sahara’s falling market share in the Indian civil aviation sector from 12 per cent to 8 per cent in the past three months, the reluctance of many of Air Sahara’s pilots to work with Jet, the controversy over transfer of Air Sahara’s parking rights at airports to Jet, and troubles over integration of personnel are also factors that have made Jet aware of the perils of the deal.

Meanwhile, the Sahara India group held meetings to work out their strategy. "If the deal comes unstuck, it will be a major loss for us as Jet knows all our trade secrets. It will be difficult to compete with them now," said a Sahara source. If the deal falls through, Jet Airways will lose about Rs 100 crores, which it had paid as advance payment.

Meanwhile, civil aviation minister Praful Patel refused to intervene in the matter. "I don’t want to comment on this matter. If Mr Goyal has not received clearance so far from the home ministry, how does this concern the civil aviation ministry?" Mr Patel said.

Courtesy: Asian Age