Cabinet clears merger of Air India, Indian

New Delhi: The merger of the state-owned carriers Air India and Indian, has been cleared by the Union cabinet on Thursday, information and broadcasting minister Priyaranjan Das Munshi told reporters here. The ministry for civil aviation may receive authorization to implement the merger in a smooth and time-bound manner.

The combined airline will not only become the largest carrier in the country, but also would be comparable in size to other major Asian carriers. The merger is being affected to enable the airlines to leverage their assets and capital and build a stronger and sustainable business.

Over the next five years, Air India and the Indian Airlines, which now operates under the brand name 'Indian', are looking forward to inducting 111 state-of-the art aircraft, both from the Airbus and Boeing families. The merged entity expects to regain the dominant market share they had once enjoyed, both domestically, as well as on international routes.

Against the estimated integration cost of Rs200 crore, some of it in one-time costs, it is expected that the merged entity would realize benefits of approximately Rs820 crore by the end of the third year.

It is expected that the ministry of civil aviation, as well as the airlines, will complete the legal and procedural formalities in 16 weeks. Post the legal merger, it is expected that the merger would take another 24 months to implement, according to a Cabinet note.

The Cabinet nod came nine days after a group of ministers, headed by external affairs minister Pranab Mukherjee, cleared the proposal.