Airlines Deals

Jet Airways on Tuesday moved the Supreme Court, seeking transfer of all cases relating to the failed Air Sahara deal, pending before the Bombay High Court and the Lucknow District Court.
In a statement “clarifying” its stand on the failed deal, Jet Airways said, “Any comments on the merits of the controversies between parties will, therefore, be inappropriate and improper.”

The controversy arose after Air Sahara submitted before the Lucknow District Court that the deal was still “subsisting”, while Jet executives maintained that it had expired. “For commercial reasons, and in the interest of Jet Airways and its family of shareholders, the management decided not to extend the time” after the expiry of the share purchase agreement on June 21, Jet executives told PTI.

Jet’s Rs 2,300-crore deal to buy Air Sahara fell through as the parties missed the June 21 escrow account deadline since Jet chairman Naresh Goyal did not get a security clearance to join the Air Sahara board.

Observing that commercial transactions had “their own time frame based on financial and other techno-commercial compulsions”, the Jet statement said, “On account of this, the time limits in the share purchase agreement have expired before the conditions precedent have been met.”

Regarding the “credentials” of its management in the wake of a controversy over the delay in granting of security clearance to Goyal, Jet said, “The latest communication by the Government of India has laid the controversy to rest — nothing more needs to be said.”

Goyal was cleared by the home ministry a day after the deal collapsed. Terming the controversy over the failure of the deal as “unfortunate”, Jet said it had “acted entirely on sensible commercial and legal advice received by it” and that there was no need to read anything more into the actions of the two parties “beyond commercial considerations”.

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Air Sahara today filed a rejoinder at the District and Session Court here on the objection petition moved by Jet Airways regarding their failed takeover deal.

The rejoinder affidavit was filed in the court of incharge of District and Sessions Court K K Sharma, who directed that the matter be put up on June 30, the next date fixed for further hearing.

Districts and Session Judge Shiv Charan Sharma on June 23 gave Air Sahara time till today to file the rejoinder

The court had restrained Jet Airways from selling Rs 500 crore worth share of its failed takeover target Air Sahara, while extending the freeze on the escrow account opened for the proposed acquisition.

The court posted the matter for further hearing to June 30 and said if necessary it will continue on July one.

The Court said its interim order freezing the escrow account and that on the Sahara share sale will continue till further orders.

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Air Sahara on Wednesday filed a caveat in the Supreme Court with a view to prevent Jet Airways from getting an ex-parte order on its transfer petition, which is likely to be filed on Wednesday.

Jet Airways, which had on Tuesday said it would file a petition seeking transfer of all cases pending in Lucknow court and the Bombay High Court, is likely to do so later Wednesday.

The caveat, filed on behalf of Sahara India Commercial Corporation, urged the apex court that nothing should be done in the matter without any notice to it.

Jet Airways had on Tuesday described the collapse of its Rs 2,300 crore deal to acquire Air Sahara as “unfortunate” and blamed “vested interests” for making inaccurate statements.

It had also said that its decision not to salvage the pact was based purely on ‘commercial considerations’ and that it was moving the Supreme Court for transfer of litigation in different courts.

“For commercial reasons, and in the interest of Jet Airways, and its family of shareholders, the management decided not to extend the time”, the airline had said.

Alleging that Jet had terminated the contract, Sahara had moved the District Court in Lucknow on June 21 and sought an interim stay on operation of the escrow account and followed it up with another injunction on the sale of share pledged by it to Jet for an advance of Rs 500 crore.

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Jet Airways, the country’s largest private sector airline, said that it had filed a transfer petition before the Supreme Court. This development comes even as the Mumbai High Court and Lucknow district courts are hearing the arguments on the Rs. 2,300 crores Jet-Air Sahara deal, the Business Standard reported.

Jet said that the decision was prompted by commercial reasons and in the interest of Jet Airways and its family of shareholders and not to extend the time limit of the share purchase agreement to acquire.

The share purchase agreement entered into between Jet Airways and Sahara Airlines was based upon certain conditions precedent being satisfied before the due date, June 21. These conditions related to some permissions being given by the government as well as certain policies relating to mergers and acquisitions of airlines being in place, a statement said. The statement also added that on account of this, the time limits in the share purchase agreement have expired before the conditions precedent has been met.

Jet, while blaming the government indirectly, said the policy changes in key areas have their own time frame while the reform and liberalisation on the aviation sector has been relatively fast paced.

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Air Sahara on Wednesday filed a caveat in the Supreme Court with a view to prevent Jet Airways from getting an order on its transfer petition, which was also likely to be filed on Wednesday.
Jet Airways, which had on Tuesday said that it would file a petition seeking transfer of all cases pending in Lucknow court and the Bombay High Court, is likely to do so.

The caveat, filed on behalf of Sahara India Commercial Corporation, urged the apex court that nothing should be done in the matter without any notice to it.

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Air Sahara has filed a caveat in the Supreme Court to prevent Jet Airways from securing an ex-parte order on its petition seeking transfer of all cases to the apex court. The petition urges that nothing should be done in the matter without any notice to it.
Jet Airways, which on Tuesday said it would file a petition seeking transfer of all cases pending in Lucknow court and the Bombay High Court, is expected to have done so later in the day.

Sahara had moved the district court in Lucknow on June 21 and sought an interim stay on operation of the escrow account and followed it up with another injunction on the sale of share pledged by it to Jet for an advance of Rs500 crore. The case is expected to come up for hearing on June 30.

Jet Airways on Tuesday had described the collapse of its Rs2,300 crore deal to acquire Air Sahara as “unfortunate” and blamed it on “vested interests.” It also said the decision not to salvage the pact was based on purely ‘commercial considerations’ and that it was moving the Supreme Court to avoid the inconvenience of litigation in different courts.

Civil aviation minister Praful Patel, meanwhile, said the government’s merger and acquisition policy for the civil aviation sector was not tailor-made to suit any airline but based on the best international practices. He was replying to a statement by Jet Airways in which the airline had indicated that delays in the framing of policies and granting clearances had led to the collapse of the deal.

“The policy cannot be tailor-made to suit any particular airline Government is very clear on this issue. The policy that is broadly in place is based on best international models and practices,” told reporters in New Delhi.

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Jet Airways on Tuesday broke its silence for the first time after its acquisition plan to buy Air Sahara at a cost of Rs 2,300 crore fell through.

As both carriers are now locked in a bitter legal battle at Mumbai and Lucknow courts, Jet said it is also filing a transfer petition before the Supreme Court.

The share purchase agreement between Jet and Sahara expired on June 21. Jet said the pact was based on some permissions from the government and certain policies relating to mergers and acquisitions relating to airlines being in place.

‘’The reform and liberalization in aviation sector have been relatively fast paced. However, policy changes in such key areas have their own timeframe. They have to balance various strategic needs and accommodate different points of view. Sustainable reform must hasten slowly,'’ it said.

Commercial transactions have their own timeframe based on financial and other techno-commercial compulsions, Jet added. ‘’On account of this, the time limits in share purchase agreement have expired before the conditions precedent have been met. For commercial reasons and in the interest of Jet Airways and its family of shareholders, the management decided not to extend the time,'’ it said.

Litigation is now pending in the Bombay High Court (initiated by Jet Airways) and the Lucknow courts. A transfer petition is also being filed by Jet Airways before the Supreme Court.

Any comments on the merits of the controversies between parties will therefore be inappropriate and improper, it said.

Jet said it acted entirely on sensible commercial and legal advise received by it.

Air Sahara, on the other hand, maintains that Jet was looking for a price cut from the agreed Rs 2,300 crore to Rs 1,800 crore and wriggled out of the deal when its plan did not materialise.

Lucknow district judge Shiv Charan Sharma has frozen the Rs 500 crore escrow account of Jet at ICICI Bank.

Industry sources say Air Sahara is losing about Rs 100 crore every month and the near future will see more difficulty as the lean season begins.

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The airline has moved to Bombay High Court against Sahara Chief Subroto Roy for recovery of Rs 500 crore advance money, reports CNBC-TV18.

Roy was a personal guarantor for the refund of the money in case the deal was terminated. The money should have been returned within seven days of the abortion of the agreement.

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The legal tussle between Air Sahara and Jet Airways has reached the higher judicial authorities today. Jet Airways has moved the Supreme Court, asking that hearing on the petition filed by Air Sahara at the Lucknow District Court be moved to the Bombay High Court, reports CNBC-TV18.

But earlier in the day, Air Sahara filed a caveat in the Supreme Court asking for a hearing, in case Jet files for transfer petition.

Acording to Sahara Counsel, Sahara fulfilled all conditions precedent to merger. He further added that Jet did not deliberately cooperate in obtaining approvals

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With its Rs 2,300-crore merger deal with Jet Airways running into rough weather, Air Sahara is planning to go ahead with its international plans on its own.
The carrier is exploring the possibility of starting international operations from September this year. The earlier plan was that the single entity formed after the merger would operate domestic as well as international flights

Air Sahara president Alok Sharma told FE, “We will be starting our international operations from September and we are looking at destinations like Thailand and China to start with.” The airline already operates flights to Colombo and Kathmandu. The carrier also has the permission to operate long-haul international flights.

Currently, Air-India is the only airline from India flying to China. Indian Airlines and Air-India cater to the Thailand route. Jet Airways also has plans to fly to Thailand.

After the fallout of the deal with Sahara, Jet has discontinued the Amritsar-London flight as it was using Air Sahara’s aircraft for the operation.

Down But Not Out
Existing routes
Colombo and Kathmandu
Status quo
A-I is the only airline from India flying to China
Fleet size
27 aircrafts, which includes 20 Boeing and 7 Bombardier Canadair regional jets
” We will start our international operations from September and are looking at destinations like Thailand & China ”
— Alok Sharma
President, Air Sahara

Sharma said that the airline’s revenues from international operations are quite healthy. “Initially, we are targeting a 15% revenue from international routes and we expect it to go up to 40% in the next five years,” said Sharma. The airline at present has a fleet of 27 aircrafts, which includes 20 Boeing and 7 Bombardier Canadair regional jets.

The company is also evaluating the option of opting for Airbus 330/340 and Boeing 777 aircraft. The airline has not taken a decision on the type of aircraft, which will be deployed for international operations.

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