Air-India, Indian merger only by mid-2007

The proposed merger of Air-India and Indian, formerly Indian Airlines, to face domestic and international competition in the skies, will overshoot the April deadline and is likely to be completed by mid-2007. A committee of secretaries appointed by the Group of Ministers (GoM) to go into the proposal has favoured the merger of the two Government-owned airlines. "Although the GoM has also cleared the merger, the Union Government is yet to give the green signal," Chairman and Managing Director of Air-India V. Thulasidas said. He said even if the mandatory clearance for the merger from the Cabinet came in the first week of February, it would need a minimum 16 weeks to complete the formalities. Accenture, the consultant that prepared the road map for the merger, had fixed that many weeks for completing the legal merger process after obtaining the Cabinet nod. Mr. Thulasidas said there were no hitches for the merger.

The employees and the unions of Air-India were in favour of the merger with Indian and had a "positive attitude." The Union Civil Aviation Ministry authorities had informed him that employees of Indian were also in favour of the merger. Better career opportunities for the personnel of the two airlines, cut in costs and being better equipped to face the competition are cited as the major benefits of the merger. The industry profits were declining. It was estimated that the proposed merger would add around Rs. 1,200 crore to the bottom line of the new entity through synergies between the two airlines. The service of the consultant would be available for one year after the formal merger to ensure the integration of manpower, marketing and sales wings of the two airlines. The merged entity would be the largest airline in Asia. Asked about the name of the airline after the proposed merger, Mr. Thulasidas said "we have been told not to worry about the name and logo now" and ponder it only after the formal merger.

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