Legal process for AI, Indian merger completed

New Delhi, Aug 24: The ministry of corporate affairs has approved the application for merger of Air India (AI) and Indian into a new company called National Aviation Company of India Limited (NACIL).

With the filing of approval today with the Registrar of Companies, the legal process for merger of both government-owned airlines in NACIL stands completed. Mr V Thulasidas takes over as chairman and managing director while Mr Vishwapati Trivedi will be joint managing director of the merged company.

The merged airline will fly under the brand of Air India both domestically and internationally. The new airline will have a combined fleet size of over 112 aircraft, comparable to the best airlines in Asian region, and will rank among the top 30 airlines in the world.

As part of its fleet acquisition programme of 111 aircraft, the new airline will induct 21 new aircraft (seven Boeing 777, 10 Airbus 320 family aircraft and four Boeing 737-800) this year itself.

AI recently launched its inaugural daily, non-stop Mumbai-New York flight with the first Boeing 777-200 LR aircraft. This is the first non-stop India-US flight by a domestic carrier. The new Boeing 777 aircraft was the first of the series to sport the new branding.

The merger of AI and Indian will provide an integrated international and domestic footprint which will significantly enhance customer proposition and allow easy entry into a global airline alliance. The merged airline has got opportunity to unlock significant synergies on account of optimal utilisation of resources through improvement in load factors and yields on commonly serviced routes as well as deployment of freed up aircraft capacity on alternate routes.

Leveraging the combined network and route rationalisation will result in improved product offering to consumers. The merger will provide an opportunity to fully leverage strong assets, capabilities, infrastructure and skilled and experienced manpower available with both the companies to the optimum potential.

It will also provide a large and growth oriented company for the people in larger public interest, provide maximum flexibility to achieve financial and capital restructuring through revaluation of assets and provide an increased thrust and focus on airline support businesses.

Overall, over Rs 800 crore of annual synergies are expected to be realised once the integration is completed.

Domestic and international flights will seamlessly integrate, allowing passengers to check in for their international flight from any domestic point in India. The new fleet brings in a product and service level that is the best in class, and will now include in-flight entertainment, better seats and enhanced in-flight service.

A combined schedule now means better connectivity to the largest international airline in India as well as improved service to various domestic points in India. An improved frequent flier programme is in the pipeline along with a dedicated holiday packages website with new offerings to various global destinations. The consumer is a clear winner in the merger, having a much-improved product and superior service quality.

Apart from the main passenger airline, other revenue generating divisions such as cargo, low cost carrier (LCC), ground handling and MRO (maintenance, repair and overhaul) will gain increased focus in the merged entity. They will be able to unlock significant value in the new structure where each will be managed as a separate strategic business unit (SBU) under the corporate umbrella of the merged organisation.

AI Cargo is in the process of acquiring freighter aircraft by way of conversion of B737 and A310 passenger aircraft. The first A310 freighter aircraft has already started operations to the Gulf and Europe while the B737 freighter will be operating in northeast region. The new cargo airline is targeting a freighter fleet of almost 10 aircraft over the next year.

Under the brand of AI Express, the low cost carrier will fly on both domestic and international routes. Positioned as a value airline, it will serve markets that require point-to-point connectivity at a lower price point. AI Express will have a brand new fleet with in-flight entertainment, meal service and other services that distinguish it from traditional low cost carriers.

The new MRO and ground handling SBUs of AI will allow greater focus on these aviation service areas that have a huge potential for growth in the fast growing Indian aviation scenario and bring in new revenue streams for the airline.

The merger safeguards the employees with an assurance that all will be secured as a result of the merger. All current benefits and perquisites and career progression will be protected and all employees will be better off as a result of the merger. UNI