Jet Airways’ move to merge its wholly-owned subsidiary Jet Lite with itself saw the former’s stock rise as much as 5 per cent in Thursday’s trade before settling with lower gains of about 2 per cent. But market volatility cut these gains and more on Friday.
Jet Lite, formerly Air Sahara, was acquired by Jet Airways in 2007. It was not a smooth ride with Jet Airways and the Sahara Group embroiled in a protracted legal battle over the price to be paid for the acquisition.
Besides, the debt taken to fund the purchase and the losses made by Jet Lite added to Jet Airways’ troubles over the years. The latter has not made an annual profit since 2007.
In a major restructuring last year, Jet Airways discontinued its low-cost offering being operated under Jet Lite and shifted to an entirely full service model.
Over the last two fiscals, Jet Airways has also taken huge write-offs on its investment in Jet Lite.
These steps seem to have set the tone for the latest merger move.
While after the merger, Jet Lite will cease to operate as a separate entity, its air operating permit will still be retained by Jet Airways.
Jet Airways which posted a good show in the recent June quarter expects operational synergies from the merger.