Merger process at AI, IA moving apace

Mumbai: The merger of Indian and Air-India is expected to yield synergy benefits of Rs600 crore, after expenses of Rs200 crore as the cost of integration for the two state-owned airlines. The new entity, National Aviation Company of India (NACIL), which will start operations under a single code from the middle of July, is also expected to carry a pretty large number of managers at the top of the hierarchy.

AI officials have said that they expect the new organization to have strength of 151 top- rung officials form the rank of general manager upward. With a chairman-cum-managing director (CMD) at the top of the pyramid, there would also be nine functional directors or CEOs and 47 executive directors.

According to AI officials, the board of the new entity will have three group CMDs, three functional directors, six CEOs of individual businesses and an equal number of independent directors.

A total of 12 working groups have been formed to deal with integration issues and officials feel that all sticking points shall be easily resolved. As of now, no retrenchments are being planned and the organisation's pay structure is being rationalised to place employees with similar work experience at par.

Officials expect NACIL to have an initial market share of 32 per cent, and gain from benefits due to synergy of operations up to 3 to 4 per cent of its total revenue. They estimate savings in terms of cost to be up to 4 to 5 per cent of total costs. NACIL is expected to start with a fleet strength of about 150.

The new entity will have six strategic business units (SBU) and the low cost carrier will be one of them. The two subsidiaries of Indian and Air-India, Alliance Air and Air-India Express, will not be merged at this stage.