Jet Airways, which recently agreed to acquire all the shares of Sahara Airlines Ltd for a lumpsum price of US$322 million, has decided to rename Air Sahara as Jetlite. (4/17/2007)
Jetlite will be positioned between a low-fare carrier and a full-service airline. Jet’s application for the change in name is at present with the Ministry of Company Affairs, and once the airline gets the clearance from there, the new entity will become Jetlite.
According to Naresh Goyal, Chairman, Jet Airways, said his company would take control of Air Sahara in the next few weeks and Jetlite, which will be a 100 percent subsidiary of Jet Airways, would be profitable in the first year of operations.
This new model will have lower costs because of synergies already existing between Jet and Sahara, Goyal told media.
“Besides, we will be renegotiating prices and sharing training facilities, which will also bring down costs, thereby making this model profitable,” Goyal said.
Goyal’s financial advisor Rajesh Chaturvedi said the acquisition was not an “asset-based but an enterprise-based acquisition and the price was decided on the basis of the value-in-use principle.” Every useful asset of Sahara would be used by Jet such as Sahara’s staff, landing and traffic rights, he said.
“Jet will get certain infrastructure at airports such as hangars, besides manpower including technical people,” Goyal reportedly said. According to local media, on the advantages of the acquisition, Goyal said that unit costs would reduce. “Engine costs will go down while offices at airports can be merged into one. A single network will be created which will push down costs,” he reportedly said.