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BY OUR AVIATION CORRESPONDENT
29th November 2005
Baron of beer and Boeings, Vijay Mallya has announced his bid
to acquire 100% stake in Air Sahara, which looking for a buyer
to offload some of its promoter stake.
Ernst & Young has completed a valuation of Air Sahara and
pegged price between $750 million and $ 1 billion. However,
there have been no takers for the hefty price tag yet.
If purchased, the Air Sahara brand will be no more - Mallya
has no intention to retain the Air Sahara name. "It doesn't
make sense," he said.
Vijay Mallya, chairman of UB group and CMD of Kingfisher
Airlines said that his price is less than that set by E&Y.
However, he did not specify what he was willing to pay. The
returns from Air Sahara do not justify the high price set by
E&Y, he said.
However, returns are not the only reason why other airlines
are keen to buy Air Sahara. Apart from Jet Airways, Air Sahara
is the only private airline which has received government's
permission to fly abroad.
Many upcoming private airlines had hoped to reap profits by
flying abroad. However, the government, earlier this year
announced norms for such permission, under which only Jet and
Sahara made the grade. So, any aspiring buyer of Sahara also
has his eyes on the potential of Sahara's foreign flight
permit.
Kingfisher, Spicejet and Air Deccan were disappointed earlier
this year when the norms on foreign flights excluded them. For
many of them, it would be good idea to buy into Air Sahara.
Vijay Mallya also said that Kingfisher Airlines would go in
for initial public offering next year to raise resources.
With the increasing number of private airlines taking wings,
it is expected to be a matter of time before consolidation
sets in. Unless profitability figures match airlines'
expectations, mergers and acquisitions will be only a matter
of time.
BY OUR AVIATION CORRESPONDENT |
