The Hindu Business Line : Mallya to put in `indicative offer' for Air Sahara stake

KINGFISHER Airline will put in an `indicative offer' for picking up a stake in Air Sahara before the October 31 deadline set by the consultants expires, the airline's Chairman and Managing Director, Mr Vijay Mallya, said on Saturday.

"We will put in an indicative offer, which will show the price valuation range that we are willing to offer before the deadline expires. However, the $750 million-$1 billion initial estimates are way too high in relation to earnings," Mr Mallya said on the sidelines of a marketing summit organised by the Confederation of Indian Industry (CII).

The structure of the indicative offer is likely to be such that Kingfisher Airline could pay a lump sum initially and a fixed amount in a year with the rest of the amount being pumped in as equity.

No maintaining of two brands: When asked whether the Air Sahara brand would be maintained if Kingfisher Airline is successful in its bid, Mr Mallya merely said, "The question of maintaining two brands does not stand. We need the scale that the acquisition of Air Sahara will provide us." While Air Sahara has been in the market for more than 10 years, Kingfisher is a new comer, as it started flying earlier this year.

In September, Air Sahara announced that initial estimates by Ernst & Young had put the airline's enterprise value between $750 million and $1 billion.

"We confirm our willingness to look at alliances and partnerships that could contribute to our own expansion and growth plans, but nothing has been finalised as yet," the Sahara Airline President, Mr Rono Dutta, had said then.

A host of domestic airlines have shown an interest in picking up a stake in Air Sahara, including SpiceJet. However, the Chairman of Jet Airways, Mr Naresh Goyal, has denied that the airline was interested in picking up a stake in Air Sahara.

Meeting DGCA norm: Meanwhile, Kingfisher Airline has stationed one Airbus A-320 aircraft in Guwahati to ensure that it is able to meet all the norms laid down by the Directorate General of Civil Aviation (DGCA). "The decision to station an A-320 aircraft in Guwahati may turn out to be a very good route for us. The aircraft not only allows us to offer a day-return product on the Bangalore-Hyderabad-Kolkata-Guwahati sector, but also provides a new connection for people wanting to travel from Bangalore to Guwahati," Mr Mallya said.

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