Mumbai, April 12
Curtains on the Jet Airways-Air Sahara saga were rung down today with the two airlines agreeing to a merger before a team of arbitrators.

Shortly after the deal was signed at a south Mumbai hotel, Jet Airways chairman Naresh Goyal told reporters that he was picking up Air Sahara for Rs 1,450 crore. On the face of it, the sum is at a sharp discount to the price originally agreed to by the two airlines last year.

“It is a good deal which is going to help us. We got a 40 per cent discount to the original price of Rs 2,300 crore. The deal is commercially viable since we are getting a lot of infrastructure and manpower - areas where India is facing a lot of pressure now. The airline business has not changed so dramatically... the deal makes complete economic sense,” Goyal said.

As per the details of the deal made public so far, all shares of Air Sahara are to be transferred to Jet on payment of Rs 1,450 crore. Jet is to pay the promoters of Sahara Rs 400 crore by April 20. A sum of Rs 500 crore paid earlier by Jet into an escrow account has been adjusted into the final price for Air Sahara. The remaining amount of Rs 400 crore will be paid to Air Sahara in four annual instalments commencing on or before March 30, 2008, Harish Salve, counsel for Jet, said. Jet will also assume interest, arrears and other liabilities of Air Sahara which amounts to Rs 600 crore.

The deal was signed after the panel comprising British Judge Lord Stein and Supreme Court Justices S.P. Bharucha and Jeevan Reddy vetted the draft proposal prepared by Jet and Sahara.

Representatives of the airlines then submitted a revised and final proposal to the three-member court-monitored committee, sources said.

Senior officials from both companies, including Pallabh Agarwal, executive director, Sahara Pariwar, Jet chairman Naresh Goyal and executive director Saroj Dutta were present. Only Subroto Roy, managing worker, Sahara Pariwar, who had posed with Goyal when the original deal was signed last year, was absent today. The arbitration was ordered by the Bombay high court when the merger was called off last year and matters reached the courts.

The combined might would give Jet more than 32 per cent share of the domestic aviation market and add at least 27 aircraft to its 62-aircraft fleet. Jet says it will also benefit from prime landing and take-off slots at major airports such as London's Heathrow, New Delhi and Mumbai.

The agreement also allows Jet to enjoy the rights on the Air Sahara brand for the next six months after which it will be returned to the Sahara group. Air Sahara will continue to operate its helicopter services under the said brand.

Leaks to the media indicate that the bitterness between the two airlines still festers. While Jet Airways, which is a listed entity, made disclosures as mandated by the Security Exchange Board of India, it is enforcing a non-disclosure agreement on the Sahara group which has not taken it well.