Mumbai: Air Sahara on Wednesday announced that the merger deal with Jet Airways is off for now.
However, it also said that Air Sahara was still in discussion with Jet Airways.
"We foresee huge consolidation in aviation industry. We were talking to Jet Airways and others for strategic relationship, we are still in discussions with Jet Airways," Air Sahara said.
Speculation was rife that Jet Airways would buy out Air Sahara to create an airline that could finally overshadow the government-owned airlines.
Though Air Sahara gave no official statement as to why the deal was not finalised despite several rounds of talks in Lucknow, sources say it was due to varying interests of the two airlines.
While Jet Airways was looking for a complete takeover, Air Sahara wanted a stake sale — which could be 10, 20 or 30 per cent — depending on the prices offered.
Air Sahara had declined to comment and Jet Airways had earlier denied the deal.
Air Sahara had appointed Ernst and Young as consultants who had valued the airlines at $750 million to a billion — a rate that analysts found exhorbitant.
Kingfisher airlines owner and liquor baron Vijay Mallya had also said that he had market information that Jet was going to buy Air Sahara.
The deal was first reported in the middle of 2005 and was the focus of intense speculation with Kingfisher’s Vijay Mallya and Jet’s Naresh Goyal in the running.
Mallya, however, on Sunday clarified that Kingfisher was out of the race for buying Air Sahara. Goyal, on the other hand, denied the deal on every single occasion.
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