Financial Daily from THE HINDU group of publications
Wednesday, Apr 05, 2006
Financial Daily from THE HINDU group of publications Wednesday, Apr 05, 2006 |
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Airlines Logistics - Mergers & Acquisitions Government - Policy Industry & Economy - PSU Govt gives in-principle nod for AI, IA merger Our Bureau
The roadmap There will be no holding company. Emphasis on one company, one culture. Monolith can better face global competition Fate of subsidiaries undecided.
New Delhi , April 4 The Government has given in-principle approval for the merger of Air India and Indian Airlines. The process will be completed this year itself, the Minister for Civil Aviation, Mr Praful Patel, said here on Tuesday. "The merger is very much on the cards and will happen this year. A clearer picture will emerge in the next two-three months. However, there is no question of having a holding company for the two airlines. It just does not work. It has to be one culture and one company. There is no mess in such an entity," said Mr Patel. However, ahead of the merger the Government needs to consider several issues, including rationalisation of routes operated by the two state-owned airlines. At present, Air India and Indian Airlines both operate flights to several global destinations in West Asia and the Far East including Bangkok, Malaysia and Singapore. Besides, the decision on which airline would be taken over by whom and the fate of the subsidiaries — Alliance Air and Air India Express — need to be resolved. Both airlines also need to decide how best to utilise their existing manpower. The Ministry of Civil Aviation recently made a presentation to the Prime Minister, Dr Manmohan Singh, on the proposed merger. Officials indicated that the merger would create a monolith that would be better positioned to take on global competition. Besides, with Air India keen on joining a global aviation alliance, the merger could provide additional benefits to passengers including access to far-flung areas of the country currently not served by any domestic airline. While a roadmap for the merger of the two airlines will be finalised in the next few months, the timing for their initial public offering (IPO) still remained undecided, said the Minister. "No decision has yet been taken on whether the two airlines should come up with an IPO together or separately," said Mr Patel.
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