www.uninews.com

Accenture wins deal to ead Merger Integration Between AI&IA

Mumbai, Sep 27 (UNI)

Air India has appointed Accenture, a global management consulting, technology services and outsourcing company, to prepare a roadmap for the possible merger of the Indian Airlines with itself.
Accenture will team with Ambit Corporate Finance and Luthra & Luthra Law Offices to prepare a detailed plan for the possible merger.
If a merger proceeds, Accenture will assist the combined entity on its transition strategy for the next year, a release issued by Accenture said.
The team is charged with evaluating the benefits of merging India’s two premier public sector airlines, developing a merger strategy including operational, regulatory, strategic and legal aspects, helping design the integration plan for the two organisations and supporting the combined entity throughout the post-merger integration phase.
‘‘With increasing competitiveness in the airline industry, consolidation can help companies increase efficiency and scale and serve customers more effectively,’’ said Sanjay Jain, Accenture’s managing director for India.
‘‘The key to realising these advantages, however, is planning for pre and post-merger activities and integration. Planning is the key to a successful merger.’’
Accenture’s cross-functional, cross-border team includes professionals with extensive experience in aviation, merger strategies, integration planning, organisation design, human capital development and working with public sector units, the release added.

http://www.indiaoutsourcewatch.com/displaynews.asp?id=news423

:.Accenture to submit its report on AI & IA merger soon

Global IT consulting and outsourcing major Accenture along with Ambit Corporate Finance are preparing a blueprint for the impending merger of state-owned carriers Air-India and Indian Airlines. The proposed merger of state-owned carriers is expected to be completed in the current financial year, civil aviation minister Praful Patel said on Monday. Ambit would help the airlines in valuations, transaction structure and capital-raising opportunities, while Accenture would provide help in terms of impact on strategic issues along with issues of post integration management and drawing up a combined business plan. Eight merchant banking firms were initially in the race, out of which three were shortlisted. Accenture, which is acting as a consultant for this proposed merger would submit its report shortly to the ministry of civil aviation. The civil aviation ministry is likely to move a cabinet note on the proposed merger in November after it receives the report from Accenture. Merril Lynch had been entrusted to carry out valuation for Air-India.

New Delhi, Oct 19 (IANS) Civil Aviation Minister Praful Patil indicated that the merger of the state-run Air India and Indian may come through by the end of this current fiscal year.

He also indicated that no worker of both the organisations would be retrenched in the new company.

'I think the merger can be completed by the end of the current fiscal year,' Patel told reporters.

'A group of ministers headed by Finance Minister P. Chidambaram will oversee this merger process,' he added.

The minister said the merger decision was taken in view of the growing competition in the market.

'The new entity after the merger will be a strong national carrier and will be able to compete in this dynamic market in a much more effective manner,' Patel said.

The minister assured

http://in.news.yahoo.com/061019/43/68mvp.html

 http://www.financialexpress.com/fe_full_story.php?content_id=144032
   
IA-A-I: holding co suggested 
 
SAGAR MALVIYA & ATREYEE DEV ROY
Posted online: Friday, October 20, 2006 at 0045 hours IST 

MUMBAI, NEW DELHI, OCT 19:  The Indian Airlines-Air-India merger consultant, Accenture, has suggested that the most optimal solution to the issue will be to float a new holding company to oversee the government’s equity in these two airlines.
The government currently owns 100% of Air-India’s Rs 153.84-crore equity, as well as the entire Rs 432-crore equity of Indian Airlines.

Accenture says a holding company structure will save IA and A-I stamp duties of Rs 400 crore, which they would have had to pay in case of a merger.

The business model suggests a group chairman and an MD with special units as profit centres to deal with cargo, ground handling, maintenance, repair and overhaul, low-cost carriers and allied activities. CEOs are to be appointed for these business units, reporting to the group CMD.

The balance sheets of both companies will be merged for integration at various levels. The consultants expect the synergies to increase the revenue of the airlines by Rs 1,200 crore over a period of four years. The combined turnover of the two companies now stands at Rs 15,500 crore.

Once the integration is complete, the airlines expect their market share to touch 40% in both domestic and international segments. The present market share of Air-India stands at 19%, while Indian Airlines’ is 22%.

Civil aviation minister Praful Patel on Thursday said the proposal to merge the two carriers within this financial year had been referred to a group of ministers (GoM) comprising the ministers of defence, finance, tourism and culture, company affairs, law and civil aviation, as well as the minister of state for personnel and Planning Commission deputy chairman Montek Singh Ahluwalia. Finance minister P Chidambaram will head the GoM.
 
 

http://www.dnaindia.com/report.asp?NewsID=1059981
AI, IA synergy gains seen at 3-4%

Praveena Sharma
Tuesday, October 24, 2006  21:50 IST
 
Accenture feels a merger will make the two carriers more competitive

BANGALORE: Accenture, the consultant for the Air India and Indian Airlines merger, in its preliminary report presented to the two airlines and the Ministry of Civil Aviation on October 12 has said that the cost savings and revenue appreciation arising out of the synergies between the airlines would be “nearly 3-4% to start with.”

Sources said the consulting firm has examined “possible synergy in the areas pf sales and distribution, fuel procurement, material procurement, passenger amenities, ground handling, parking facilities and other allied services.”

It is also currently studying the timetable of both the airlines very closely to establish a strong ‘hub and spoke’ network to interconnect Air India’s flights over major Indian gateways. This is likely to result in seamless transfer of passengers from an Indian domestic point to an international destination.

“The preliminary report of Accenture will form the platform for preparing a Cabinet note for the in-principle approval of the government to proceed with the merger,” said an industry source.

According to Accenture, the rationale behind the merger is to protect both airlines from further decline in market share. It has said that the merger would not only consolidate the position of the two carriers but also catapult them amongst the world’s top airlines in terms of passenger numbers, turnover, fleet size and growth.

Since the 1980s, Air India’s market share has steadily moved down from 30% to 19% in 2005. Similarly, Indian’s share in the domestic skies has dipped from over 40% in the 2000 to around 22% today.

The two airlines have been losing market to overseas and Indian domestic carriers, which have been consistently adding capacities. They have lost the advantage over their home skies as mega carriers like British Airways, Lufthansa expanded their route network into India rapidly.

“It is believed that the merger will provide an opportunity to leverage the assets and c apital of both airlines and build a stronger sustainable business in terms of capability and infrastructure. Its combined fleet strength would be higher than many other competitors including Emirates, Singapore Airlines, Malaysian Airlines and similar other carriers in the South East Asia Region,” said a source.

http://timesofindia.indiatimes.com/articleshow/193255.cms
Verdict on IA-AI merger soon
Byas Anand
[ 28 Oct, 2006 0024hrs ISTTIMES NEWS NETWORK ]
 
 
RSS Feeds| SMS NEWS to 8888 for latest updates

NEW DELHI: The mega merger between Indian Airlines and Air India is fast cruising towards reality.

The empowered group of ministers — under external affairs minister Pranab Mukherjee — will meet on November 13 to finalise marriage plans for the two aviation behemoths.

Sources said the GoM would take up the various routes for merger being proposed by consultant Accenture and the civil aviation ministry, and shortlist the best-possible — and most economical — route. "The shortlist would be sent to Cabinet for a final approval," a source said.

The Accenture-led consortium has suggested five different routes, which includes setting up a new entity and merging the two state-owned airlines, along with all their independent business ventures, into this new company.

The second proposal is to merge Air India into Indian Airlines, while the third route is to merge Indian Airlines into Air India. Another route suggested is to set up a holding company and keeping the two airlines as independent entities of this holding company. The final proposal is to demerge the two and maintain status quo.

The groundwork for this grand marriage in the skies has already started with the chairmen of the two airlines shooting off mailers to their top management in a bid to allay any fears of job loss.

In a letter to employees, IA CMD Vishwapati Trivedi said the merger would create a consolidated airline th at would be better equipped to meet the challenges.

Air India CMD V Thulasidas, said: "As the two networks and assets are progressively integrated over the next two to three years, it is expected that significant revenue and cost synergies will accrue to the merged entity... It is believed that potential recurring synergies will significantly enhance profitability."

YUCK!!!! IC and AI to lose their livery?????????????

But now i have decided to finally change my views on the merger. Had a good discussion with dad yesterday night on this issue only.

Now what the ministry is doing seems as if the merger will happen soon. They have never moved up merger plans to this extent. However my curses on the GoM if the merger takes place.

IC will lose its standard whereas AI will drop from worse to worst. The bloody ministry isn't capable of handling two airlines seperately with two administrators what the hell would one administrator do?

The merger is totally against the opinion of all the employees. The stuff on the media that employee opinion would be considered is all crap. They haven't even recieved letters about govt's intentionations on the mergers which they normally do.

The merger will do no good within the airline- current IC employees will continue signing the Airbus 319 320 and 321s whereas current AI employees continue signing the Boeing 737-b 747 777 and 787.

Management will be merged so a strong possibility either Thulsidas or Trivedi goes out else if the govt decides to make them both MDs and appoint another administrator as the CMD of the new airline.

A new name somewhat like "Air Indian" etc is possible so a newer livery also flows in.

With the Airbus and Boeing MRO's employees might be termed as Airbus MRO engg or Boeing mRO engg if they are IC and AI employees respectively.

Quality is 100% going to drop in both the airlines. We will find more people abusing AI and IC than now. Govt will soon come to a stage of banging their own heads.

Now a major problem that govt would face and another reason for the delays in merger is that with the merger taking place as a whole ie not only for share purposes, all the employee unions will be merged ie one union for engg of both AI and IC one union for pilots of both AI and IC and so on. This is a bigger threat to the govt. A single unacceptable decision by the govt to the employees means a joint agitation by the whole of the dept affected. This is pretty strong enough to shake the govt. Just exactly how other trade unions supported the AAI employees during airport privatisation compelling govt to think of their benefits too

Overall we will get one of the worst airlines in the history of the world---standards lowered like anything---no signs of profits, employee satisfaction 0% and an almost equal customer satisfaction.

So there comes a newly ruined airline

I would prefer to nickname the new joint airline as Air Indian till govt declares the exact merger details.

Lets pray for a better humantarian airline

http://www.iht.com/articles/2006/10/30/bloomberg/sxairindia.php

Air India may defer IPO until 2008 
By Chan Sue Ling Bloomberg News

Published: October 30, 2006
 
 
SINGAPORE: Air India, the nation's largest international carrier, could push for an initial public offering in 2008, at least a year after it plans to merge with the government-owned Indian Airlines.
 
The two airlines, which were earlier seeking separate listings, are on course to complete the merger by March 2007, according to the chairman and managing director of Air India, Vasudevan Thulasidas. He said that the first year after the merger would be spent integrating the staff and network of the combined entity, which will become one of the 10 biggest Asian carriers, with more than 110 planes and 111 aircraft on order.
 
"The idea was initially for Air India and Indian Airlines to be listed separately," Thulasidas said Sunday in Singapore. "Because of the merger plan having made good progress, the IPO can now take place only after the merger."
 
Indian carriers are selling shares and bonds as growing demand for air travel prompts them to increase their fleets. Thulasidas is tasked with the creation of an airline that will have a fleet large enough to fend off competition overseas and in India, where four new carriers have started in the past three years.
 
The combined entity will have several units in charge of businesses including the passenger airline, low-cost operations, ground-handling and maintenance, repair and overhaul services, each headed by its own chief executive, Thulasidas said in an interview. The merged entity will have one chairman, managing director and headquarters, he said.
 
Accenture, the world's largest consultant, and its partners are advising the carriers on the merger.
 
Thulasidas was in Singapore to mark the first flight of its discount unit, Air India Express, between the city state and the southeastern Indian city of Chennai.
 
Aviation Minister Praful Patel of India said this month that the merger would better position the airlines for competition. The two have lost market share to Lufthansa, Singapore Airlines and other carriers that have expanded into India.
 
"Recent performances of both the airlines have been anything but satisfactory," Patel said. "The times are changing and we need to change along with it."
 
Airlines are seeking to start flights in India, a domestic market that will probably more than double to 90 million tickets in 2010 from about 40.1 million in the year ended March 2005, said the Center for Asia Pacific Aviation. Boeing expects the market for commercial planes in India will be worth $72 billion in 20 years because of rising passenger and cargo traffic.
 
Prime Minister Jawaharlal Nehru formed the two airlines in 1953 by taking over private companies. Indian Airlines combined eight small airlines with a total of 99 planes. Air India grew out of Tata Airlines, then a part of steel and automaker Tata Group.
 
Air India had a profit of between 150 million rupees, or $3.3 million, and 160 million rupees for the year ended March 2006, Thulasidas said, without giving comparative year-on-year numbers. The airline has been profitable in the past five financial years, he said.
 
Record fuel prices this year make it difficult to forecast if earnings in the current fiscal year will better last year's, he added. Airlines in India could lose $250 million this year as four new carriers have started services during the past three years, creating more competition and forcing down fares.
 
Air India started hedging its fuel needs last year to shield its earnings from rising oil prices. The carrier won the approval from its board in September to hedge as much as 25 percent of the fuel purchased from overseas, compared with the 10 percent allowed earlier.
 
Jet Airways India, the nation's biggest domestic airline, last month said that it had a loss of 551.3 million rupees in the three months ended September, its second straight quarter of losses, as it cut ticket prices and spent more on fuel.
 
Jet Airways India, the nation's oldest carrier, has also ordered 68 more fuel- efficient planes from Boeing to replace its aging fleet and expand.
 
Air India has a fleet of 37 planes, consisting of 19 A310-300s by Airbus. Of the total, more than half are on lease, according to its Web site. Air India Express, the low-cost unit which started in April last year, has seven Boeing 737- 800s on lease.
 
Air India Express made a "small" profit in its first year of operation, benefiting from demand in the Middle East, where an average of 90 percent of its capacity is filled.
 
The low-cost unit, which began five weekly flights to Singapore from Chennai, could also start services linking other Indian cities such as Trichy, Bangalore and Hyderabad with the city- state. Depending on demand, the carrier could increase its Chennai-Singapore flights to daily, Thulasidas said.
 
Services between the Indian cities of New Delhi and Mumbai to Singapore will be reserved for Air India.
 
Air India plans to convert two of its 15-year-old A310 planes into freighters in January, to help tap rising shipments of cargo as economic growth bolsters demand for imported goods. The carrier will either "gradually" convert the other A310s to freighters or phase them out.
 
 

.... with more than 110 planes.

Fine. Most of these 110 planes are with Indian and in much better shape then the tattered fleet of Air India's Also, most of these 110 planes can fly medium range.

Feel the best thing now is to scrap this merger. Leave IA alone and let it fight the battle on its own as it definitely has a better fighting spirit and better strategies then AI.   

Find a strategic partner for AI and do what Emirates has done for Sri Lankan.

Feel there might be a maha mess. As Trivedi has been saying, this merger works to AI's advantage as it is the weaker airlines of the two.