Jet Airways' Attempted Acquisition of Air Sahara |
ICMR HOME | Case Studies Collection
» Business Strategy Case Studies Please note: This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source. |
||||||||||
"I believe that it is a good sign for the Indian aviation industry. This consolidation will lead to route optimization and rationalization." 1 - Siddhant Sharma, CEO, SpiceJet, commenting on Jet Airways' acquisition of Air Sahara in 2006. "It makes good business sense for Jet, but there is a shortage of infrastructure in India, so allocation (of parking, landing, and take-off slots) has to be fair so low-cost carriers are not disadvantaged further." 2 - Jeh Wadia, managing director, GoAir, commenting on Jet Airways' acquisition of Air Sahara in 2006. Jet Airways Spreads its WingsOn January 19, 2006, Jet Airways (India) Ltd. (JA) announced its decision to acquire Air Sahara (AS), the third largest airline company in India. It was to be the first acquisition in the history of Indian aviation industry. The deal valued at Rs.22.5 billion approx. ($500 million) was expected to enable JA, a leader in the airline industry, to further strengthen its position in the market.
Others believed that the price paid was too high, considering the fact that AS was a loss-making airline company (Refer to Table I for financials of both the companies). The deal was also opposed by some members of the Indian Parliament, who believed that the acquisition could lead to the creation of a 'monopoly entity' in the Indian airline industry. Naresh Goyal, chairman, JA, responding to some of these concerns, said, "The deal has been done after doing thorough due diligence. The acquisition will give us economies of scale and will help improve revenues."4
Jet Airways' Attempted Acquisition of Air Sahara - Next Page>>
1] " For 2300 cr, Jet buys out Air Sahara, climbs to No 1 in sky," www.indianexpress.com, January 20, 2006.
|
Case Studies Links:-
Case Studies,
Short Case Studies,
Simplified Case Studies. |