A-I, IA merger a signature away

It's official. A-I and Indian will merge to create a behemoth carrier.

It's now official. Air-India and Indian will merge to create a behemoth national carrier. Civil Aviation Minister Praful Patel, along with chairman of Air-India V Thulasidas and his counterpart in Indian (Airlines) V Trivedi, made a detailed presentation to Prime Minister Manmohan Singh on Wednesday on the merger of the two airlines.

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Patel's presentation also included a roadmap for an IPO of the combined entity after the merger. This -- the presentation -- is being seen as a major step towards merger, which, sources said, is just a signature away now --  a mere formality.

Patel and the two chairmen have been perturbed over the dwindling market share of the two airlines. The merger presentation was an exposition on how a gigantic national carrier could take on international players as well as those in the domestic private sector. The merger will result in a Rs 13,000 crore-flagship carrier, which now awaits a slew of new aircraft. Air-India presently has 42 aircraft while Air-India Express has four. The airline has signed a multi-billion dollar deal with Boeing for 68 new aircraft. As many as 40 of the existing 46 aircraft will be phased out as they are either leased or old.

Similarly, Indian has 60 aircraft, and it awaits 43 new Airbus aircraft. For them also, several of the old aircraft will be phased out.

The thinking of Civil Aviation Ministry on the merger is driven by an increasing need for synergy and routes and logistics rationalisation. The biggest impediment on the path of this merger will be manpower rationalisation because both airlines are human resource-heavy, having more employees per aircraft than any other airline in the world.