The Hindu Business Line : Jet, Sahara maintained constant contact

New Delhi April 11 Jet Airways and Air Sahara might have been bitter rivals during the last nine months since the buyout deal between the two fell through in June 2006 but even during this period the backroom channels were kept open. Sources familiar with the developments told Business Line that both the parties had been in constant touch.

Probably the realisation that delay in settling the case was hurting both the parties, as input costs were increasing, competition was becoming more intense and the outlook for the entire industry had turned negative, prompted attempts at getting an early closure to the deal.

While both parties exchanged affidavits about 10 days ago that clearly established the legal strength of arguments made by the two airlines, the final settlement of the case gained momentum last Sunday.

"Although officials of both the airlines did not meet on Sunday (April 8), there was hectic telephone contact. The following day, officials of both the airlines met in room 1067 at the Oberoi hotel in Mumbai. The meetingwas attended by Mr Pallav Aggarwal of Sahara India Parivar along with Mr Jayesh Desai, the Head (Transactions), Ernst and Young representing Air Sahara, while Mr Rajesh Chaturvedi and Mr T.N.V. Iyer represented Jet Airways.

It was decided at this meeting that the best way out possible for the two airlines would be to settle the case rather than get involved in protracted legal procedures," sources said.

The legal working draft of the agreement was exchanged at the meeting. The need for making some changes to the share purchase agreement, that could eventually lead to an agreement being signed was also discussed, these sources said.

The deal as is being firmed up now will be all-cash with Jet Airways paying Air Sahara Rs 400 crore immediately to seal the deal. Jet has already paid Rs 680 crore for the deal, including Rs 500 crore when the deal was firmed up last January.

In addition, from March next year, Jet Airways will provide Rs 137.50 crore annually for the next four years to Air Sahara. Jet Airways will also pick up Sahara Airline's liability of between Rs 150-200 crore.

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