Special Correspondent

Technical and procedural formalities will begin immediately

  • Says all legitimate employee interests will be protected
  • New firm to be 100 per cent government-owned

    NEW DELHI: A day after the Union Cabinet cleared the proposal for merging the two state-owned carriers, Air India and Indian Airlines Limited, Civil Aviation Minister Praful Patel on Friday said the technical and procedural formalities for the merger would begin immediately.

    "One company with one name, one brand, one logo, one code and single financials is expected to be in place within the coming 16 weeks. This new airline, with about 112 aircraft with both international and domestic footprint, will set fresh benchmarks for efficiency and reliability, thus benefiting the civil aviation sector in the country, specially the travelling public," Mr. Patel told both Houses of Parliament.

    He said the Government was committed to ensuring that all legitimate employee interests, including their current compensation and status, were protected.

    "There will be no retrenchment and all employees will continue in the merged company. Besides, to keep the exercise as smooth as possible, the integration of manpower will be completed in a phased manner, on the basis of transparent and objective criteria. A well-defined grievance redress machinery will also be put in place."

    The new firm to be created by merging the two carriers will be registered under the Companies Act within the next fortnight, official sources said. As the first step, a new company will be incorporated under Sections 391-394 of the Companies Act of 1956. The Government proposes to register the new airline firm as a hundred per cent government-owned public company, keeping in mind the Cabinet decision to maintain the public sector character of the merged entity.

    However, the actual amalgamation and integration process will be carried out in phases over two years, especially to cater to the integration of the combined workforce of over 30,000.

    "It is estimated that this decision would result in the net benefit of Rs.600 crore at the end of third year of merger," Mr. Patel said.

    During the next week, the Minister is likely to hold talks with the managements of the two airlines and their employees' representatives in a bid to ensure a smooth and painless merger, sources said.

    The merged entity will be comparable with UAE carrier Emirates, which has a fleet of 93 aircraft, Singapore Airlines with 118 planes and Malaysia Airlines 110. The new company will work on a model, under which separate strategic business units will be created to look after different streams such as passenger airline, cargo, low-cost carrier, Maintenance-Repair-Overhaul, engineering and catering.