It's a win-win deal for Jet Airways: Experts

Though the news of the takeover of Air Sahara by Jet Airways is yet not official, in all probability, it is a struck deal .
Financial analysts are unequivocal in their opinion that the deal is a real steal for Jet Airways.
According to Ganesh Shanbhag, Promoter, SMS Financial Services P. Ltd., “This is a win-win situation for Jet Airways. The take-over has propelled Jet Airways into the Top-500 companies in India. But importantly, this (the deal) will enable Jet to ply over a broader expanse, making it a pan-India network without phenomenal additional investments in logistics and infrastructure. Given that Air Sahara operated of several routes that were different from those of Jet’s, Jet Airways need not make any duplicated investment. Only a sprucing up of the Air Sahara fleet would suffice.”
While Jet's competition with Air Sahara has been absorbed through this deal, Air Sahara's performance had been lagging, so this deal augurs well for both, opines Upendra Kulkarni, Fortress Financial Services Ltd.
But Gaurang Shah, Geojit Financial Services, has a different take. Though not as optimistic about the deal, he thinks that Sahara too had something to gain. “Sahara’s aircrafts were aging and its cash flows were stressed.”
There are several issues that have aroused a sense of caution for analysts like Shah.
The changes in the ATF (Aviation Turbine Fuel) prices or a further rise in crude oil prices may exert immense pressures on the margins earned by players like Jet. Shah doubts if they can sustain it.
According to experts, Jet Airways may see competition from new regional airlines, and in the short term it may feel the pressure.
10/04/07 Moneycontrol.com

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Categories: Air Sahara Apr 2007, Jet Airways Apr 2007