Friday, September 04, 2015

Jet Lite merger with Jet to bring synergies

Mumbai: The merger of loss-making JetLite with Jet Airways is part of the airline’s game plan to exit the low-cost segment. The merger would lead to operational synergies and focused operations. The airline’s board had approved the merger on Wednesday.

“Jet  exited low-cost segment some months ago and this merger fits in with that strategy,” says Dhiraj Mathur, partner (aerospace and defence) at PwC India.

Jet acquired Air Sahara in 2007 and re-branded it as JetLite to compete with low-cost airlines. The subsidiary airline underwent re-branding once again in 2012 and was renamed Jet Konnect. However, these changes did not improve the company’s performance. JetLite made a loss of Rs 287 crore in FY15. For the past two years, Jet has had to write off Rs 1,872 crore, which included the value of its equity investment in JetLite (Rs 1,645 crore) and Rs 227 crore write-off towards loans granted to the subsidiary.  Jet aims to turn profitable by FY17.
04/09/15 Business Standard
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