<article>Jet Airways (India) Ltd, the country’s second-largest airline by passengers carried, will merge its wholly owned unit Jet Lite (India) Ltd with itself.</article>

Jet Airways (India) Ltd, the country’s second-largest airline by passengers carried, will merge its wholly owned unit Jet Lite (India) Ltd with itself.
“The existing equity shares held by Jet Lite (India) and its nominees in Jet Airways shall stand cancelled without any consideration,” the airline said, adding that Jet Lite shall stand dissolved.
After the merger, Jet Lite will operate as a separate division of Jet Airways. It will further strengthen Jet Airways’ efforts to provide consistent services under a single brand across its network, leading to a stronger market presence, the airline said in a separate statement.
This will result in more focused operational efforts, realizing synergies in terms of compliance, governance, administration and costs, the airline said.
“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,” said Naresh Goyal, chairman of Jet Airways.
The merger, however, will not lead to the airlines surrendering its permit to operate in India. According to a Jet Airways executive, the airline will continue to have two separate air operating permits (AOP) for flying in India—one each for Jet Airways and Jet Lite.
The approval by the boards on Wednesday follows an earlier decision by Jet Airways to streamline and align its domestic operations, along with creating a strong and uniform Jet Airways master brand.
“It makes the life of Jet Airways easy in terms of finances and operations,” said Mahantesh Sabarad, the deputy head of research at SBICap Securities Ltd. Sabarad also cautioned that the biggest pain point in these mergers are integration of human resources. “I presume that Jet Airways must have sorted out the policy issues of integrating human resources before entering into merger.”
Jet Airways, in which Etihad Airways PJSC has a 24% stake, had reported a net profit for the first quarter of 2015-16 compared with a loss in the year-ago period, as it benefited from lower fuel prices, higher other income and a one-time gain from aircraft lessors.
The Naresh Goyal-promoted airline reported a profit of Rs.221.70 crore for the three months ended 30 June compared with a loss of Rs.217.65 crore in the year-ago quarter. Net sales increased 11.55% to Rs.4,834.50 crore from Rs.4,334.07 crore a year ago.
Jet Lite posted a net profit of Rs.4.7 crore for the fiscal first quarter compared with a net loss of Rs.40.4 crore in the year-ago period. Sales stood at Rs.322.5 crore during the quarter compared with Rs.357.4 crore in the year-ago period.
In the quarter ended 31 March, Jet Airways took an impairment charge of Rs.1,172.39 crore on its investments in Jet Lite. This was the second impairment charge taken by the airline on account of Jet Lite after a Rs.700 crore charge in the March 2014 quarter.
Jet Lite (formerly Air Sahara) came to Jet Airways following an acquisition from the Sahara Group. Ever since the deal to buy Sahara Airlines—which operated Air Sahara—was reached in April 2007, the two sides have been wrangling over the acquisition price. The initial price for Air Sahara was Rs.2,000 crore, but the two companies renegotiated the deal and eventually settled at Rs.1,450 crore.
In 2009, Sahara India filed an application with the Bombay high court claiming Jet Airways had defaulted on payments towards the purchase of Air Sahara and sought the court’s permission to seize Jet’s assets.
In a separate development, Jet Airways has appointed Amit Agarwal as its chief financial officer. Agarwal was previously with Suzlon Energy Ltd and Essar Steel Ltd as chief financial officer, said two senior executives from the airline.
“As a policy, we make announcements on new recruitments at the appropriate time after due approvals,” Jet Airways spokesperson said referring to the chief financial officer appointment.
Shares of Jet Airways lost 1.34% to close at Rs.319.60 on Wednesday on the BSE, while the benchmark Sensex lost 0.95% to close at 25,453.56 points.
K.G. Vishwanath, a partner at consulting firm Trinity Aviation Consultants Pte Ltd of Singapore and former vice-president (commercial strategy and investor relations) at Jet Airways, said the merger is a positive development for Jet Airways as it will help in creating single airline with single brand name. However, Jet Airways will lose the option to set off the accumulated losses of Jet Lite against future profits of the airline, he said. Vishwanath cautioned that pilot integration would pose as a big challenge in the integration.
(This article was first published on <a href="http://www.livemint.com/" target="_blank">Livemint.com</a>)

Jet Airways (India) Ltd, the country’s second-largest airline by passengers carried, will merge its wholly owned unit Jet Lite (India) Ltd with itself.

India: Jet Airways to merge Jet Lite with itself

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