The merger of Indian Airlines and Air India has cleared its last major hurdle, receiving clearance from the ministry of corporate affairs to form the country?s largest airline with an estimated combined turnover of $4 billion, 34,000 employees and a fleet of over 120 aircraft.
According to a senior ministry official, the merger was considered and cleared under Sections 391-394 of the Companies Act. ?After considering the viewpoints of various stakeholders?including the unions, creditors, and management?the ministry approved the merger on Monday,? the official said.
Since both carriers are government-owned, they required clearance from the corporate affairs ministry instead of high court, as mandated for private airlines.
The two companies would combine to form a new state-owned entity, the National Aviation Company India Ltd (Nacil), with a common chairman & managing director and joint managing director.
More than a dozen unions representing employees ranging from pilots to ground staff and cabin crew had submitted their views on the merger. ?Among the big demands made was that agreements struck between the individual companies and their employee representatives should be honoured by the new entity,? the ministry official said.
Nacil will use transfer pricing to factor in relevant cost of strategic business units and, thereby, each unit will be treated as a separate profit centre.