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Public offerings of Indian, Air-India delayed

         New Delhi: The planned initial public offerings by the state-run airlines, Indian and Air-India, have been deferred till the Government decides on a proposed merger of the two carriers, Civil Aviation Minister Praful Patel said on Friday. "In view of the merger proposed between Indian and Air India, we are in the midst of taking a decision as to whether we should merge these two entities first or go for an IPO (Initial Public Offering). Our advisors are looking at the various option and as soon we are able to take a decision on this, we will move accordingly," Patel told reporters on the sidelines of a tourism expo in New Delhi. "There is a suggestion also made that better valuation can be arrived at if there is a merged entity, so we are...that is why I said, we are looking at various options and on the basis of the good advice we will get, we take a decision," he added. The Centre had earlier this month announced the merger of state- run carriers Indian Airlines Ltd. and Air India Ltd. as part of a wider strategy to take on nimble private players. Both international carrier Air-India and domestic-focused Indian Airlines have ageing fleets compared to rivals such as Jet Airways and Kingfisher Airlines. Consolidation in the nascent industry, which saw four airlines launched last year, appears inevitable as more carriers appear on the horizon. Cut-rate pricing is also putting pressure on profit margins of all carriers. Jet's recent 500-million dollar purchase of smaller rival Air Sahara, cemented its dominance in the domestic sector that is forecast to grow more than 20 percent a year over the next five years, boosted by higher incomes and lower fares. The two carriers, beset with large workforces and strong unions, are also on an aircraft-buying spree to augment their fleet and win back market share. The Government had earlier this month also signed separate agreements with two private consortia led by Indian business groups to enable them to take control of and modernise the nation's two busiest airports-New Delhi and Mumbai.
-April 21,  2006

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