Air Sahara's Roy: Final exit	Jet Airways' Goyal: Taking off
SAGA OF A DEAL
October-November 2005: Sahara boss Subrata Roy puts Air Sahara on the block. Ernst & Young values it at $500-600 million (Rs 2,250-2,700 crore) December 2005: Rumours surface that Air Sahara is looking for a strategic partner, not a buyer. Vijay Mallya's Kingfisher Airlines emerges as a contender January 2006: Mallya backs out, saying the asking price is too high (he was willing to pay $250 million or Rs 1,125 crore). On the 19th, Jet Airways announces that it will buy Air Sahara for $500 million (Rs 2,250 crore). The deadline for completing the deal is March 24 February 2006: Air Sahara pilots go on strike, grounding most of its flights across the country. After two days of disruptions, Air Sahara decides to waive the six-month notice period pilots need to give before leaving March 2006: American Airlines announces that it will terminate its code-share deal with Air Sahara following the change in ownership. The Directorate General of Civil Aviation (DGCA) announces that it will divvy up Air Sahara's rights among all the private carriers. A Jet-Sahara combine, by virtue of being the biggest, would still get the lion's share, but Jet didn't want a lion's share; it wanted the whole thing. Deal flounders. Rumours surface that Jet's Naresh Goyal wants to renegotiate the price March 30, 2006: Government allows Jet Airways to acquire all of Air Sahara's existing rights. Deal goes through

It's a plot from a typical Bollywood potboiler. Rich boy fights off rival suitors to win poor girl's heart. A date is fixed for the engagement, when the script takes its first turn. A powerful guardian enters the scene and announces that the bride-to-be cannot carry any dowry with her. The families get into a huddle, the boy's side threatens to call off the nuptials, the media has a field day, till yet another twist puts the tale back on track. The guardian changes his mind and everyone (well, almost) lives happily ever after.

To cut a long story short, Naresh Goyal and his Jet Airways (the "rich boy" in our example) can take over Subrata Roy's Air Sahara lock, stock and barrel. It gives the former 28 additional night parking slots for its planes at various airports, 28 leased aircraft and the right to operate all of Air Sahara's 130-odd domestic flights a day. The icing on the cake: the Jet-Sahara combine is the only private Indian airline that can operate international flights till 2008.

However, there are a couple of downsides. Air Sahara had signed a code-share agreement with American Airlines on the latter's Chicago-New Delhi service. The US carrier now wants out of this pact. And Jet's own application to fly to the US is hanging fire pending an investigation by the US Department of Homeland Security (DHS). That means the Jet-Sahara combine can't operate on this lucrative sector. The other problem is that several of Air Sahara's more experienced pilots and cabin crew, apprehending job cuts and loss of seniority, have left the carrier in droves.

Despite this, most analysts are positive about the deal. A recent ABN Amro report (which recommends a 'Buy' on the scrip) points out that this deal will increase Jet's fleet size by 50 per cent to over 70 aircraft. This will change Jet's position from strong to dominant, despite the fact that in February, Air Deccan overtook Air Sahara to become the third-largest domestic airline.

The report says the deal could add 36 per cent to Jet's revenues and 48 per cent to earnings within 24 months because its authors believe that the latter will be able to trim Air Sahara's costs and bring them down to its own impressive levels.

However, it isn't clear what Jet will do with its acquisition. For now, it seems that the Air Sahara brand will be retained. However, there is no information on how long Goyal can use Sahara's brand name and logo. A source close to Goyal says this issue will be resolved soon.

The deal is done; only the formalities-and the small matter of Roy pulling out $500 million (Rs 2,250 crore) from an escrow account in ICICI Bank-have to be completed now. This means one of the two surviving carriers of the 1992-93 airline boom has been acquired by the other, becoming, in the process, the first casualty of the current aviation boom. The question that's doing the rounds now is: who's next?