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AI-IA merger path set

If everything goes as per the government’s plans, state-owned carriers Air India and Indian Airlines would have merged by the end of the next financial year.

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BANGALORE: If everything goes as per the government’s plans, state-owned carriers Air India and Indian Airlines would have merged by the end of the next financial year.

In a move that depicts the urgency of the government to move forward with the amalgamation of the two carriers, private consultant Accenture India Private Ltd, which has been given to prepare the feasibility report, has been asked to submit the preliminary report on the merger by October 15 for government approval.

According to senior Air India officials, the consultant will have to chart out the merger process within 16 weeks of getting the government clearance.

The plan would be completely executed by March, 2008.

The consultant, though, would continue to be involved in the post-merger integration issues for a further 52 weeks.

The government has appointed a core group, headed by ministry of civil aviation joint secretary R K Singh, to monitor the progress of the effort and coordinate with Accenture.

In addition, it has also constituted four working groups, which will coordinate on the major issues relating to commercial, human resources, finance and operations, engineering and infrastructure arising during the process of merger.

Each of these four groups will comprise five members from the civil aviation ministry, the two airlines and a nominee from Accenture.

“The core group and working groups will meet as frequently as possible at the instance of the consultants. The core group would also review the progress made by the consultants in the merger process,” said Air India company secretary S Venkat.

The merger of the national carriers has been proposed to create an internationally competitive carrier and achieve a better operational efficiency through their inherent synergies. It is also expected to maximise the revenues with improved economies of scale.

After the deregulation of the aviation sector, both the carriers have been facing stiff competition from private airlines on international and domestic routes. Together, the two carriers will be taking deliveries of over 100 aircraft valued at over Rs 44,000 crore in the next few years from the two major aircraft producers - Airbus Industrie and Boeing Co.

Analysts say the success of the merger will largely depend on how well the issues of staff retrenchment and overlapped resources are tackled.

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