COMMENTARY
INTERVIEWS
SPECIALS
CHAT
ARCHIVES

IA, A-I boards moot merger; new holding company to be formed

The boards of Indian Airlines and Air-India met in New Delhi on Monday and decided to form a holding company that will usher in an Indian airline giant -- comprising IA and A-I. The merged entity will be governed by a joint management group.

The Union government will have to ratify the decision for the merger to take effect.

The merger decision was based on the recommendations of consultants A F Fergusson.

The Kelkar Committee had suggested a gradual, staggered approach, starting with strategic operations and flight schedules of the two airlines. But the boards settled for a straight merger.

For it involved no other expenditure for additional infrastructure and manpower.

The proposed venture will retain the human and other resources of IA and A-I that will be redeployed as per the needs of the new entity.

The holding company will enter into a common memorandum of understanding with Helicopter Corporation of India and Alliance Air, the subsidiaries of IA.

When the new company comes into being, the functioning and performance of IA and A-I would be judged jointly. A common balance sheet is also part of the plan.

However, IA and A-I will function on a day-to-day basis with maximum autonomy under the common board.

The idea is to have synergy in the short-term and a proper merger in the long-run, a spokesperson of IA said. This way optimal utilisation of resources of IA and A-I can be achieved to meet the challenges of a competitive and growing market, he added.

Business news