`Air Sahara a profitable exit, not distress sale'

The Sahara group today said the sale of its airline to Jet Airways for $500 million was not a "distress deal but a profitable exit" from the business that did not hold promise and future in the short-to-medium term.

Dubbing the exit from the airline business "a financially prudent and smart business move", Alok Sharma, executive vice-president of Air Sahara who has already been offered a slot by Jet in the new dispensation, said there was no pressure on the group on account of financial and operational performance of the airline.

"We felt that future profits in the business were suspect. Not only are margins in the airline business, particularly domestic, extremely low, the sky is also crowded with many players without matching infrastructure," Sharma said.

He also asserted that Air Sahara had been making profits for the last two years.

Asked about the difference in valuation of up to $1 billion done by Ernst and Young and the deal price, Sharma said: "Our valuation was based on the company's future plans including expanding the fleet from the present 27 to 85 in the next three-four years. Jet has its own plans, and their valuation would be in accordance with that but we are happy with the deal."