Cabinet approves AI-Indian mega merger plan

New Delhi, Mar 1 (UNI) The union cabinet put its stamp of approval on the merger of Air India and Indian (Airlines) today, almost a week after the empowered group of ministers (eGoM) endorsed the proposal.

So we'll soon have a mega carrier in the skies with a combined turnover of over Rs 15,000 crore, having the country's largest fleet of aircraft and operating to more destinations than any other airline in the Indian market.

''The merger will enable the two airlines to leverage their combined assets and capital better and build a stronger and sustainable business,'' said Minister of Information and Broadcasting P R Dasmunshi.

The new entity stands to gain over Rs 820 crore per year after three years from synergy benefits against the estimated integration cost of Rs 200 crore, he said.

Thus economies of scale in procurement of materials like fuel, insurance, consumable goods and catering will increase the profitability by over Rs 600 crore.

The legal and procedural formalities are expected in the next four months, said Mr Dasmunshi. After that, it will take two years for the implementation.

The new entity will have more aircraft than Singapore Airlines, Malaysian Airlines and Thai Airways. Also, with new aircraft acquisitions cleared by the government for both airlines, the combined fleet strength would go up to 130.

However, in terms of annual passenger traffic, it will lag far behind the three Asian tigers.

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