News: 'Merger of Air India, Indian Airlines on track'

(BL 12/05/2006) New Delhi - The merger of Air India with Indian Airlines is on track and it is possible to have single entity operations by April 1 next year, the Chairman and Managing Director, Air India, V. Thulasidas, told Business Line.

Officials, however, felt that there were some key areas including human resources, operations and infrastructure that needed to be looked into in greater detail before the merger could be finalised. Besides, a decision would also need to be taken on the future of subsidiaries that both the airlines have formed.

"The merged entity will need to have some subsidiaries although whether there is a need to have all the existing subsidiaries is still being debated. For example, we should be able to do with one low-cost airline subsidiary rather than have two such entities," officials indicated.

Merger issues

Despite a number of issues not being sorted out, AI officials feel that there should be few problems in the completion of the merger by the end of this financial year itself. "Ticklish issues like deciding on the swap ratio of the shares or fixing a particular price for the sale were not there. Besides, with the owner of both the airlines being the same there should be little problem in having one company, one board and one balance sheet," officials said.

Officials involved with charting out the merger pointed out that it had already reached the third stage with the AI board recently giving the go-ahead for inviting expression of interest from banks to be appointed as consultants to draw up a road map for the conclusion of the process.

Earlier, the Government had given its in-principle approval for the merger, after a presentation was made before the Prime Minister, Dr Manmohan Singh.

The merged entity would have a fleet strength of more than 100 new aircraft and should be in a better position to take on global competition.