New Delhi: State-owned Air India will likely unload 15% of its equity in an initial public offer (IPO) when its merger with domestic counterpart Indian Airlines is completed, a report said.
V. Thulasidas, chairman of the National Aviation Company of India Ltd (NACIL), the airlines’ new parent company, said the government would make the final decision on the size of the IPO.
But he told reporters his “personal view” was that NACIL would dispose 15% of its equity, the PTI reported on 8 October. The government has said it is merging the two airlines in a bid to create a “world-class airline” that can compete globally and domestically. Singapore Airlines and Emirates have already expanded into India’s booming travel market.
The IPO would be staged once the merger of Air India and Indian Airlines was finished and both airlines’ operations were fully integrated. Air India is the nation’s biggest international carrier and Indian Airlines is the second-largest domestic airline after privately run Jet Airlines.
Thulasidas, speaking in the eastern city of Kolkata, gave no timeframe for the IPO, which he said would be aimed at making the new merged company “a more business-like entity.” But he said before the IPO, employee stock options (ESOPs) would be offered to the staff and they would be announced shortly.
Air India was engaged in talks on forming an international alliance with Star Alliance as part of its global expansion, he said. The merged airline will fly under the brand of Air India domestically and internationally with a combined fleet size of more than 112 aicraft -- comparable to the best airlines in the Asian region.
Long derided for its old planes, the company is engaged in a massive fleet replacement programme. It has already placed orders for 111 aircraft at a cost of Rs 450 billion (11.4 billion). Forty-three are Airbuses and the rest are Boeings. Sixteen have been delivered and the rest are slated for delivery over the next three to three-and-half years.
Post merger, the two airlines will have 34,000 employees. The government cleared the airlines’ merger in August.