Air India-Indian merger cleared, notification for birth of National Aviation Company of India Ltd

22 August 2007

New Delhi: Rejecting all the objections filed by different unions representing pilots and cabin crew to ground staff and even pensioners, the ministry of corporate affairs (formerly ministry of company affairs) has approved the merger of Air India and Indian, clearing the last major hurdle in creating a combined flag carrier.

The MCA's approval has come in despite objections raised by employees and staff unions. Several unions had filed objections against the merger with the ministry of corporate affairs as creditors - employees with dues pending from the company - but the objections seem to have been overruled.

The approval for the proposed combined entity, National Aviation Company of India Ltd (NACIL), has been sent to civil aviation ministry and an official notification is likely to be issued tomorrow.

The two carriers had approached the corporate affairs ministry under Section 396 of the Companies Act, 1956 for their dissolution and registration of NACIL. As per this section, the ministry has the power to allow merger of public sector enterprises in public interest.

Its approval now paves the way for the amalgamation of the two airlines. The new combined carrier will be called Air India for bth international and domestic flights. After the merger, the two carriers will transfer their total authorised share capital of over Rs15 crore to the new company, NACIL.

The merger, which will straightaway make the new AI one of Asia's top 10 airlines in terms of size, is aviation minister Praful Patel's bid to create a single national airline with the "precision and reliability of Lufthansa, and the passenger service standards of Singapore Airlines".