Jet Airways (India) will run Air Sahara as 100 per cent subsidiary till various regulatory approvals are secured for the $500 million acquisition.
"We have reached an understanding with Air Sahara to extend the validity of the share purchase agreement (SPA) by 90 days. During this term, the two airlines will continue to operate as independent entities," said Jet Airways Chairman Naresh Goyal.
"Till we get the approval from the Director-General of Civil Aviation, we will run Air Sahara as 100 per cent subsidiary. It will be merged with Jet Airways at a later stage, subject to regulatory approvals," Goyal added.
Jet Airways has also extended the term of the escrow arrangement signed between both the airlines. The enterprise value of the transaction remains unchanged at around $500 million.
"The two parties have also agreed that Jet Airways will advance a sum of Rs 500 crore out of the agreed consideration to the shareholders of Air Sahara against the pledge of 100 per cent of Air Sahara's shares," Goyal said. If the agreement terminates, this advance would be repaid to the company.
Goyal also said the there was no cause for concern in the transfer of parking bays and other infrastructure at the airports to Jet Airways in the wake of acquisition.
"Acquisitions and mergers are happening worldwide. There is no reason for not transferring infrastructural facilities at airports to us while merging Air Sahara into the company," Goyal said.
For running Air Sahara as a 100 per cent subsidiary, Jet Airways would have to secure approval of SPA and change the management of Air Sahara. The new Air Sahara board will have five directors–Naresh Goyal, Javed Akthar, Saroj Datta, Vic Dungca and Vijay Kelkar.
"We are all already on the Jet Airways board and there could not be any reason for the delay in the clearance of change in the management," Goyal said.
He pointed out that the subsidiary may start operating in the next three months and Jet Airways was going ahead with its foreign currency convertible bonds (FCCBs) plan.
"Our bankers are studying the FCCB proposal. There is no delay in that," he said. Goyal also said Jet Airways was keen on the employees of Air Sahara and there was no concern for employees as they will be absorbed by both the companies.
"At present, the industry is facing severe shortage of personnel. All airlines need people at all levels including pilots, engineers and other management staff," Goyal said.
