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http://www.business-standard.com/common/storypage_c.php?leftnm=10&bKeyFlag=BO&autono=105165&chkFlg=


PMO queries merger of Indian, Air-India


Bipin Chandran / New Delhi September 19, 2006


Ministries say proposal not financially viable.   The Prime Minister’s Office (PMO) has objections to the civil aviation ministry’s proposal to merge the two state-owned carriers, Indian Airlines and Air-India, into a holding company with two operating divisions.   According to a composite note prepared by the PMO, which includes comments from the finance and commerce ministries, the proposal in its current format is not viable because the two airlines were set up for different purposes and a merger will weaken their position in the domestic and international markets.  


The finance ministry has said the carriers operate different aircraft — Indian Airlines flies Airbus and Air-India Boeing — and integrating the two fleets will result in higher costs of multiple maintenance facilities and spares. It will also cause the new entity to lose its focus.   The finance ministry maintains that Indian Airlines is required to fly to a number of loss-making destinations, which, after the merger, will hobble the airline as it competes against international airlines that have no such social obligations.  


The commerce ministry has argued that Indian Airlines gets certain subsidies, such as during Haj, which could be questioned by the World Trade Organisation.  


However, plans to list the two carriers will be taken forward to raise funds to finance fleets and route expansion. The government is likely to dilute up to 20 per cent equity in the carriers through initial public offers.



-- Edited by karatecatman at 18:10, 2006-09-19

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Aviation Min cabinet note in Nov on AI-Indian merger
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www.uninews.com


Aviation Min cabinet note in Nov on AI-Indian merger


 New Delhi, Sep 19 (UNI)


The Civil Aviation Ministry is likely to move a cabinet note on the proposed merger of public sector carriers Air-India and Indian in November after it receives a report from consultancy firm Accenture.


 ‘‘There are no impediments in the process. Everything is going on as planned’’, Civil Aviation Minister Praful Patel told reporters here.


 He said the consultancy firm, appointed to prepare the roadmap for the merger of the two state-owned carriers, would submit its report in October.


 ‘‘We hope the cabinet note on the matter should be ready by November after we receive this report’’, Patel said in response to questions, adding that the proposed merger process was moving on track and would be completed as planned within the current financial year 2006-07.


 Official sources said there were some key areas like human resources, operations and infrastructure which needed to be looked into in greater detail, before the proposal could be finalised. A decision on the future of their subsidiaries, Alliance Air and Air-India Express, would also have to be taken.


 The merger of Air-India and Indian would churn out a mega carrier with about 130 aircraft that could take on major global carriers like Singapore Airlines, Emirates and British Airways.


 The global aviation scenario has witnessed mega mergers in the past few years, like KLM-Air France and Lufthansa- SwissAir. However, India’s first and much-hyped Rs 2,200 crore takeover bid of Air Sahara by Jet Airways failed and is now before the courts. 


 


 


This is certainly getting curiouser and curiouser.



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Accenture wins deal to ead Merger Integration Between AI&IA
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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.



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karatecatman wrote:

Accenture wins deal to ead Merger Integration Between AI&IA



Why is this news? Wasn't this decided many moons ago?

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


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



by Indiaoutsourcewatch Bureau

9/29/2006


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.



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http://timesofindia.indiatimes.com/articleshow/2162188.cms
AI, IA may be merged under new company
Byas Anand
[ 13 Oct, 2006 0126hrs ISTTIMES NEWS NETWORK ]
 
 
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NEW DELHI: The grand plans for a marriage between Air India and Indian Airlines are finally ready. As per a final proposal — penned by wedding planner Accenture-led consortium — a new corporate entity should be set up and the two airlines, along with all their independent business ventures, are to be merged into this new company.


This new company will be governed by a board of directors and have one group chairman & managing director as the top boss. This firm will have six business units — run by independent CEOs — to manage the different businesses of running a low-cost airline, maintenance & engineering (MRO), catering, ground handling and integrated passenger services for domestic and international.


"The CEOs of these ancillary businesses will report to the group CMD. The board will include the existing members on the boards of AI and IA," the source said.


This would, in effect, mean that a single airline company will be formed — the brand for which is yet to be finalised — which will operate both domestic and international flights, as also full-service and low-cost operations. This is the top proposal submitted by the Accenture-led consortium as the road forward for merging the two behemoths.


"Accenture has, in all, submitted five routes for merging AI and IA. Creation of a new firm and merging the two carriers into this company is the top proposal," the source said.


The second proposal by Accenture is to merge AI into IA, while the third route is to merge IA into AI. Another route suggested is to set up a holding company and keep the two as independent entities of this company. The last proposal is to maintain status quo.


All these proposals would be forwarded to IMG this week for a final deliberation.


"The IMG is expected to hold its meeting on the merger matter between October 16 and 18, and take a final view on the merger. The final shortlist of proposals would then be sent for a Cabinet approval," the source added.



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Holding company may be preferred.

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Indian, AI told to seek staff feedback on merger
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www.uninews.com


Indian, AI told to seek staff feedback on merger 


New Delhi, Oct. 16 (UNI)
 The Union Government has suggested that the top brass of Air India and Indian jointly consult with their staff before a final decision is taken on the merger of the two State-owned airlines.


At a meeting here , the Union Minister for Civil Aviation, Mr Praful Patel, asked the Chairman and Managing Director Air India and Indian to jointly meet with senior level management of the two airlines not only to ascertain their views but also explain the human resources and other matters connected with the merger.


The need to specify that there would be no job losses due to the merger was reinforced at the meeting. The airlines have been asked to complete the interaction in time for including the feedback in the Cabinet note that is to be prepared.


Accenture, which is undertaking the task of preparing the road map for merger of Air India and Indian, had suggested five options.


At the meeting the five options put before the Government included forming a new company into which both the existing airlines would be merged, the possibility of each of the airlines merging into one another and status quo being held.


A clearer picture on the route to be followed will emerge soon, when a meeting of the Inter-Ministerial Group is to be held. It has been suggested to the Government that there should be a Group Chairman and Managing Director of the new entity and each operation be treated as a business unit headed by a Chief Executive Officer (CEO).


The practical and financial problems that could arise in bringing about the merger were also highlighted at the meeting.


Tax, the stamp duty that would have to be paid as also human resource issues could hold up the proposed merger of airlines. To get over these problems, it was suggested that since both the companies were Government entities, a waiver could be sought on payment of stamp duty. Besides, it was suggested that the Finance Ministry could be approached to consider allowing aviation under Section 72 A of the Income-Tax law. This provision deals with carry forward and set off of accumulated loss and unabsorbed depreciation in amalgamation or demerger cases.


 
 



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Air India-Indian merger put on fast track

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



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I like this guy!


This is all that was needed to give the merger process a push....Had read sometime back, that Praful Patel was very keen and optimistic on the merger inspite of reservations and opposition by quite a few people.



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 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.
 
 


 



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A merger? Lets' watch. 


Now, and the latest is that Guru Dasgupta (CPI) has put the UPA on notice by saying mid-term polls might be a reality. Once this man starts opening his mouth, UPA sits up. CPI not too happy that Trinamool and Cong ganged up on it to protest the SEZ and Tata car project. 


 



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AI, IA synergy gains seen at 3-4%
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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.


 



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In support of what was said earlier


The LEFT is not happy and is going to raise major objections to the merger.


It is going to become an issue.


http://www.hindustantimes.com/news/181_1828248,0008.htm


http://www.hindustantimes.com/news/181_1828248,0008.htm
Left criticises Govt's 'take' on spy rings


United News of India


New Delhi, October 23, 2006
 
 
Charging the UPA government with going soft on the "espionage rings" in the Indian Army, the Left parties on Tuesday asked the Centre to plug all loopholes to ensure that the armed forces were free from all such vices.


Talking to UNI, top leaders of the CPI, CPI(M) and Forward Bloc said Defence Minister Pranab Mukherjee's revelations that Pakistan's Inter-Services Intelligence (ISI) was active in the country simply showed "our soft approach in the matter".


Mukherjee had stated on Monday that it was a "matter of concern" that the ISI was active in the country.


CPI leaders AB Bardhan and Gurudas Dasgupta said the reports of infiltration of spies into the Indian Army showed that the country's counter-espionage system had been soft.


Another top CPI leader, Shamim Faizi, sought to impress upon the government that a stray incident should be used to clear the alarming situation.


"Before making any concrete statement, the government should investigate the whole affair," he said.


CPI(M) senior leader Nilotpal Basu said the infiltration of ISI agents in the Indian Army called for better vigilance by the security agencies.


"It is not the only incident when security has been breached. Earlier there have been reports about the CIA penetration into our intelligence network and cyber network. That was due to our proximity to the US. All these issues should not be lost sight of," Basu, a former Rajya Sabha member, said.


Forward Bloc National Secretary G Devrajan called for stringent measures while recruiting Army personnel. "Mere revelations won't do."


He said the matter should also be viewed in the contest of the recent report of the deployment of surrendered Kashmiri militants in the PM's security.


On the merger of the Indian Airlines and Air India, and the selling off of the residual stake in Maruti Udyog Limited, the Left leaders criticised the Congress-led coalition for going ahead with these despite the Left's opposition.


Dasgupta said the move was neither in the interest of IA or the AI as the service conditions in the two airlines were different.


Dasgupta, party Floor leader in the Lok Sabha and AITUC General Secretary, questioned the urgency in going ahead with the merger. "Why should these two airlines be merged. Why cannot they work in tendem," he asked.


The CPI leader also asked the government to make its position clear whether it wanted to "liquidate its stake or keep these airlines".


Basu said his party had always been in favour of the merger of IA and AI as there were several areas of synergy but the merger involved a lot of complexities relating to manpower and technical operations.


"The government should, therefore, talk to the employees, officers and all concerned of the two airlines," he added.


Faizi, editor of the party weekly, New Age, said the government had already handed over the management of Maruti to the Japanese MNC Suzuki. It will only be the final burial of the profit- making PSU.


The Left leaders said the process of handing over the Maruti started during the NDA regime. "The UPA has continued with it which shows a continuity in surrendering national assets of the profit- making PSUs to foreign capital.
 
 


Gurudas is someone the Govt listens to. Interesting days.   


 



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http://timesofindia.indiatimes.com/articleshow/193255.cms
Verdict on IA-AI merger soon
Byas Anand
[ 28 Oct, 2006 0024hrs ISTTIMES NEWS NETWORK ]
 
 
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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."



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http://timesofindia.indiatimes.com/articleshow/223224.cmsc
Designer wear for AI crew grounded
[ 30 Oct, 2006 0030hrs ISTTIMES NEWS NETWORK ]
 
 
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NEW DELHI: With the government close to finalising wedding plans for its grand union with Indian Airlines, the septuagenarian Air India has grounded the much-touted exercise of getting its cabin crew uniforms redesigned by the fashion gurus of India.


Air India had roped in five top-notch fashion designers — the likes of Ritu Beri, J J Vallaya, Tarun Tahiliani, Satya Paul and Lifestyle — to give its cabin crew and staff a designer look.


While AI and the designers had held several meetings — and ramp walks — in the past to discuss various designs, a final cut on the uniform is yet to come through.


"In the meantime, the government has decided to go ahead with the merger of Air India and Indian Airlines. So, we have decided to put in abeyance the redesigning exercise till such time that a final approval on the merger comes from the Union Cabinet,"an AI spokesperson said.


The designers, officials said, have already been informed about the change in plans. "Since the merger would create a new, single entity, it was felt that Indian officials should also be taken on board with the redesigning of crew uniform. Also, the final shape of the merger, the new brand and the new corporate colours would only be decided after the Cabinet approval. So, there was no point in going ahead with the redesigning now as it would not have served any purpose,"an official said.


This redesigning process, the official said, will be revisited by the end of the current fiscal — the deadline set by civil aviation minister Praful Patel for merging Air India and Indian.


"As the merger may possibly create a new ethos, we believe it will only be appropriate to look at the exercise of creating new livery post that stage,"the official added.  


 


Hope they think about this really well and not make a mess. Will be really bad to see AI and IA loose their colours. 



 



-- Edited by karatecatman at 12:13, 2006-10-30

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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



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http://www.zeenews.com/articles.asp?aid=332431&sid=BUS&ssid=53






AI-Indian merger: New business model mooted




New Delhi, Oct 30: As the process to merge Air-India and Indian gathers momentum, a business model that is understood to have found acceptance among officials has recommended creation of the post of a group CMD for the merged entity with special business units (SBUs) headed by separate CEOs.

These SBUs or divisions, to be run as independent profit-centres, are proposed to be set up in the areas of integrated passenger service covering both domestic and international operations, cargo business, ground handling, MRO (maintenance, repair and overhaul), low-cost carriers and other allied activities, official sources said.

This proposal forms the basis of a note for the union cabinet, which has to give its final stamp of approval before the merger process can go ahead. The cabinet would act on the recommendations of a group of ministers, which is meeting here on November 13.

The focus of these SBUs would be to maximise revenue in the single operating company by joint sales strategy, common distribution network and outsourcing plans.

This business model also recognises the principle dissimilarities in the career progression, seniority and compensation packages for the employees of the Indian and Air- India, the sources said.

M/S Accenture, the consultants appointed for preparing the roadmap for the merger, are currently working on these issues to develop a unified approach whereby these problems could be corrected without disturbing the pay structure and seniority in both the organisations, they said.

The chiefs of the two state-owned carriers have already written to their respective employees seeking to allay their apprehensions regarding the merger.

In similar letters to their staff, the chiefs of AI and Indian stated that the merger would turn the combined airline into the largest carrier in the Asian region. They assured them that HR issues were a top priority of the government and categorically ruled out any retrenchment.

The two chiefs also assured the employees that due care would be taken to protect their remuneration, perks and status and sought their cooperation in the process.

A major recommendation proposed to be carried out is to merge the financial books of both companies since their shareholders are the same, the sources said, adding that this would set the path for further integration at various levels.

While several merger options have been suggested by the consultant, the most optimal option seems to be the merger of the two airlines into a new company.

The shares of the new company should be issued to the government to the extent of their shareholding in Air-India and Indian, the sources said.

It has also been proposed that the stamp duty for the merged entity to come into being should be mitigated by a Central Ordinance.

A suggestion to amend Section 72(A) of the Income Tax Act be amended to include the aviation industry to provide it with concessions in the event of a merger or amalgamation.

The merger is projected to add around Rs 1,200 crore to the bottomline of the new entity through synergies between the two airlines in different areas.

Sources said there could be an estimated 3-4 per cent saving in costs and increase in revenue up to Rs 1,200 crore in the next two-three years.

Bureau Report



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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.    



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Patel assuages AI, Indian staff fears on merger
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The creation of a hydra headed monster!!!


http://www.indianexpress.com/story/15695.html


Patel assuages AI, Indian staff fears on merger
Raghvendra RaoPosted online:


Tuesday, October 31, 2006 at 0000 hrs Print  Email
NEW DELHI, OCTOBER 30:


With Civil Aviation minister Praful Patel making it abundantly clear that he wants the proposed merger of national carriers Air India and Indian to go through before the end of the current fiscal, his ministry, in a confidence-building exercise, has asked the top management of both the airlines to circulate a detailed note on the proposed merger to every single employee of theirs.


The integration of the workforce of both the airlines being a major area of concern, the note is primarily aimed at explaining the rationale behind the proposed merger and the benefits it will result in for both the carriers.


Significantly, the note explicitly reiterates the government’s earlier stated stand that the merger will not lead to any “retrenchment of personnel” and that “a fair and objective approach to handling people’s concerns will be adopted”. The ministry has further tried to assure employees of both the carriers that the merger process will be tailored in way so as to ensure that it protects the “remuneration, perquisites and status of all the employees”.


The note also highlights the challenges raised by the unprecedented boom in the civil aviation industry, increase in domestic and international passenger traffic and entry of new airlines to drive home the need to have a “consolidated airline entity” which can “effectively leverage on synergies arising out of complementary networks”.


The ministry has further said that it expects the recurring synergies of both the carriers to significantly enhance the profitability of the merged entity and would equip it better to face intense competition and declining industry profitability.


While Air India’s chairman and managing director V. Thulasidas has already shot off the letter to his employees, Indian’s CMD Vishwapati Trivedi is likely to do so shortly. The Group of Ministers (GoM) headed by External Affairs minister Pranab Mukherjee is scheduled to meet on November 13 to examine issues related to the merger.


raghvendra.rao@expressindia.com



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