Analysts tracking the company said the airline incurred a loss of Rs 3 crore (Rs 30 million) every day. To add to its woes, its market share has come down to 8.5 per cent from 12 per cent over the last six months.

They added that the number of aircraft had also come down. Out of its fleet of 27 aircraft, four Boeing aircraft have been grounded for C-Check while seven CRJ aircraft are flying three to four hours a day, which is half their normal flying hours. The entire Boeing fleet of 20 aircraft is also flying average seven hours instead of 12 hours.

Air Sahara, however, has put up a brave face. Sources in the Lucknow-based airline said they were hopeful of running the company without the help of Jet Airways [Get Quote].

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"We will raise over Rs 500 crore (Rs 5 billion) to turn around the operations. We have already requested our employees to look after the operations. We have no immediate plans for route expansion and aircraft acquisition though."

Analysts said Jet's insistence that the price be reduced put Air Sahara supremo Suboto Roy in a piquant situation.

"Roy does not, for obvious reasons, want to sell Sahara for anything less than the earlier valuation of Rs 2,300 crore (Rs 23 billion), while Jet is now quoting Rs 1,380 crore (Rs 13.80 billion). Therefore, it's difficult for him to accept lower valuation as demanded by Jet. On the other hand, if the deal falls through, Roy will find it even more difficult to fetch the same valuation of Rs 2,300 crore from others. In fact, let's not forget that Kingfisher Airlines had valued the Sahara at $300 million (Rs 1,350 crore)."

A senior Kingfisher Airlines executive said the company was not interested in acquiring Air Sahara even at its earlier quoted price.

"There are issues in Air Sahara which go beyond flying in international routes. Now, Jet's proposal to renegotiate the valuation proved that Kingfisher took the right move by pulling out of the race," he added.

Another problem is that a team of top Jet Airways executives have been running Air Sahara for two months.