Jet-Sahara deal may finally take off

By agencies   |   Friday, 31 March 2006, 08:00 Hrs
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NEW DELHI: In a move that comes as a major boost to the $500 million takeover of Air Sahara by Jet Airways, the aviation ministry’s draft guidelines for mergers & acquisitions has provisions that allow transfer of all assets of one airline company to another.

This will enable Jet Airways to take over the aircraft, routes, parking bays, landing slots and hangers that are now vested with Air Sahara. The new guidelines will be notified next week, officials said.

The Aircraft Acquisition Committee has finalized the draft and it will need clearance from civil aviation minister Praful Patel before it is made as official policy, they added.

The committee — which functions under the ministry of civil aviation — has been working on the M&A policy draft for airlines since last week.

Once the draft turns into official policy, the Directorate General of Civil Aviation (DGCA) will be in a position to decide on the proposed Jet-Sahara merger. As of now, Jet Airways has not filed an application with the civil aviation ministry for merger of Air Sahara, since no guidelines are available for M&As in the airline industry. The DGCA had sought guidelines from the ministry for taking decisions on such applications.

In effect, the M&A policy draft allows transfer of all assets owned by one airline to another in the case of a takeover. However, these assets cannot be leased or sold to a third party.

No policy for M&A exists till now and the aviation industry has not seen many such proposals. Jet’s takeover of Air Sahara and the proposed merger of Air-India and Indian are part of the consolidation trend which has already picked up globally.

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