Jet Airways, JetLite to merge

Jet Airways acquired Air Sahara in 2007 and rebranded it as JetLite

Jet Airways has announced that it will merge its loss making subsidiary JetLite with itself, eight years after its acquisition and rebranding.

Jet Airways acquired Air Sahara in 2007 but the deal has been mired in controversy over its purchase price and is a subject of litigation in Supreme Court between the two parties. Post acquisition Air Sahara was rebranded as JetLite and at present there are eight Boeing 737s in its fleet.

The airline holds two operating permits at present and will continue to hold both the permits even post merger.

JetLite will be run as a division of Jet Airways but will cease to be separate company. Maintaining two permits gives us operational flexibility, an airline spokesperson said in response to queries.

The other advantage of the merger will be from a financial perspective. In two consecutive years Jet Airways wrote off its entire Rs 1800 crore equity investment in JetLite because of continuous losses made by the subsidiary.

The merger would no longer necessitate write-offs and improve the airline's profits. Jet Airways aims to return to profits in 2017.

"Jet Airways has made demonstrable progress in the implementation of its three-year turnaround strategy with the objective of returning to profitability. The merger of Jet Lite into Jet Airways is a key step to strengthen Jet Airways' operations and create a seamless organization, delivering exceptional service to its guests," Jet Airways chairman Naresh Goyal said in a statement.

The merger will result in more focused operational efforts, realizing synergies in terms of compliance, governance, administration and costs, the airline said.

Jet Airways had acquired Air Sahara to stave off Kingfisher Airlines from acquiring it and compete effectively with no frills brand. Post acquisition it underwent rebranding exercise on two occasions - first as JetLite and then as Jet Konnect but the airline was unable to make a profit. In FY 2015 JetLite made a net loss of Rs 287 crore which was lower than Rs 427 crore loss a year earlier. JetLite's fleet too shrank from about 20 planes three years ago to eight planes now and its market share is down to 3 percent.