The Hindu : Front Page : Cabinet nod for Air India, Indian merger

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Friday, Mar 02, 2007
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Cabinet nod for Air India, Indian merger

Vinay Kumar

NEW DELHI: The Union Cabinet on Thursday cleared the merger of the state-owned carriers Air India and Indian, Information and Broadcasting Minister Priyaranjan Dasmunsi told reporters here.

The Civil Aviation Ministry might be authorised to take all consequential and ancillary actions for a smooth and time-bound merger .

The merger would enable the airlines to leverage their assets and capital better, and build a stronger and sustainable business.

The combined airline would become the largest carrier in the country and would be comparable to other major airlines in Asia.

It is expected that at the end of the third year of merger, the synergy benefits of approximately Rs. 820 crore a year would be available to the merged entity as against the estimated integration cost of Rs. 200 crore, some which would be a one-time cost. Therefore, the potential recurring synergies are expected to enhance profitability by over Rs. 600 crore, about four per cent of the current combined assets.

The Ministry and the airlines are expected to complete the legal and procedural formalities in 16 weeks.

After the legal merger, it would take 24 months for implementation, a Cabinet note said.

The Cabinet nod came nine days after the proposal was cleared by a Group of Ministers, headed by External Affairs Minister Pranab Mukherjee.

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