Kingfisher pulls out of Air Sahara race

The Vijay Mallya-promoted Kingfisher Airlines has withdrawn from the race to acquire domestic carrier Air Sahara, a part of the multi-crore Sahara India group.

Kingfisher Airlines and Jet Airways were the leading bidders for acquiring a 100 per cent stake in Air Sahara, which connects to 24 domestic and four international destinations with 134 daily direct flights and offers 13,900 seats daily.

Liquor baron Vijay Mallya today said Kingfisher was not interested in buying out Air Sahara, adding "let others buy it". Mallya said his airline was doing well and expanding rapidly.

"We are now planning to introduce first-class services from March-end or April. At this moment, Kingfisher is not interested in Air Sahara," he said.

The stumbling block in the takeover was the valuation by consultant Ernst & Young, which pegged Air Sahara at $750 million. Kingfisher had, however, bid for $400 million, while Jet Airways had offered $550 million.

A senior Jet Airways executive said the airline was not at all interested in Air Sahara. "Our chairman Naresh Goyal had earlier clarified that Jet was not interested in Air Sahara. We are busy with our fleet and route expansion, and are not aware of any such developments on Air Sahara acquisition," he said.

Industry sources, however, said the takeover for Jet would be now easy as Kingfisher had opted out of the race. Earlier, low-cost carrier SpiceJet had also evinced its interest in Air Sahara.

"In the wake of severe shortage of pilots, human resources will be the main attraction in taking over Air Sahara for Jet. At one shot, the acquirer will get cabin crew and other supporting human resources with existing routes," they said.

Meanwhile, Mallya ruled out dilution of stake in Kingfisher Airlines before its initial public offer, slated this year.

Kingfisher recently placed a fresh order for 30 Airbus A320 aircraft at the Dubai Air Show 2005 in a $1.9 billion deal, which follows its purchase of 20 ATR 72-500 Turboprop Aircraft valued at $350 million.

Kingfisher is also the first Indian carrier to have placed an order for five Airbus superjumbo A380s, five A350s and five A330s. The deliveries of A330s are expected to begin in 2007 while the A380s and A350s arrive in 2010 and 2012 respectively.