By IANS
Bangalore : Premier domestic airline Kingfisher and low-cost carrier Air Deccan will merge soon and operate as a single entity from April 1, 2008.
The decision was taken at a marathon board meeting of Deccan Aviation here late Wednesday under the chairmanship of Captain G.P. Gopinath and vice-chairman Vijay Mallya.
The members of the Kingfisher board also participated in the four-hour meeting held after Deccan Aviation’s 12th annual general meeting (AGM) late evening. Deccan Aviation is the holding company of Air Deccan.
At a joint press conference later, Gopinath and Mallya told reporters the merger would be based on the recommendations of Accenture, the global consulting firm, which was commissioned to prepare a comprehensive report on the pros and cons of such an exercise.
“Kingfisher will merge with Air Deccan. Both the airlines will operate as a single corporate entity under Kingfisher brand. Post-merger, Air Deccan, which is a listed firm on the Indian stock exchanges, will be renamed as Kingfisher after securing statutory approvals including that of its shareholders in the next two-three months.
“The merger will bring about synergies across the board and lower the cost of operating both airlines for greater productivity under a single entity,” Gopinath said.
After the merger, Mallya will takeover as chairman of the new entity and Gopinath will be its vice-chairman. A new board will be constituted, which will include some of the present directors of the respective boards.
Mallya said another global consulting firm KPMG would be asked to do the valuation and the swap ratio would be decided accordingly. Leading auditors Dalal & Shah will advise on the structure of the merged entity.
“The boards of Kingfisher and Deccan Aviation will meet again in mid-January for formalising the merger. The charter services of the respective airlines will be hived off and operate as an independent entity. Post-merger, Kingfisher will operate as the single largest (private) airline in the subcontinent,” Mallya said.
Besides operational synergies, the management and staff of both airlines will be integrated.
In the run-up to the proposed merger, the two airlines consolidated their operations after UB Holdings Limited, which has a majority stake in Kingfisher, acquired 26 percent equity in Deccan Aviation for Rs.5.5 billion in June this year and increased its holding to 46 percent by making an open offer to buy an additional 20 percent equity for Rs.5.75 billion in October.
Together, the alliance partners operate 550 flights a day to about 70 destinations with a combined fleet and sharing resources.