The Hindu Business Line : Kingfisher Airlines, Deccan decide to merge

Piloting the event: Capt G.R. Gopinath, Chairman, Deccan Aviation Ltd (right), and Mr Vijay Mallya, Vice-Chairman, arriving for the company’s annual general meeting in Bangalore on Wednesday. —

Our Bureau

Bangalore, Dec 19 The boards of Kingfisher Airlines and Deccan Aviation late Wednesday decided to merge both the airlines. The name of the merged entity will most probably be Kingfisher Airlines.

In this manner, there will be no delisting of Deccan Aviation from the stock exchanges. Dr Vijay Mallya told newspersons today that any listed entity can change its name just as any listed entity can acquire or merge with the boards’ approval. After the stock ratio is finalised, UB Holdings will have in excess of 51 per cent in the merged entity.

These changes will take effect before March 2008. The new entity will start functioning from the next fiscal. The brand Deccan will continue to remain.

Earlier in the day, the board of Deccan Aviation considered a report from Accenture Consulting which has suggested a merger with Kingfisher Airlines.

“The decision will be taken on Wednesday (on the merger),” the UB Group Chairman, Dr Vijay Mallya, told newspersons on the sidelines of the annual general meeting of Deccan Aviation. The Vijay Mallya-owned UB Group has nearly 46 per cent stake in Deccan Aviation. Dr Mallya said though he may not be able to give details of the report, it had spelt out a few options for integrating the operations of both airlines.

He said there were several areas where the two airlines could reduce costs and build-down manpower through synergies. Deccan Aviation Chairman, Capt G.R. Gopinath, said Deccan will continue to remain a low-cost airline and hence there will be no dilution of its brand. “But I will be okay with whatever the board decides,” he said. The UB Group president for finance and a member of the Deccan Aviation board, Mr A.K. Ravi Nedungadi, pointed out that delisting Deccan Aviation to merge it with Kingfisher Airlines could pose problems.

Hence technically it will be a reverse merger.

Currently, the UB Group holds nearly 46 per cent stake in Deccan Aviation and fully owns Kingfisher Airlines. In case of the merger, the UB Group will merge Kingfisher Airlines with Deccan Aviation. Mr Nedungadi said the UB Group will “certainly push the Deccan Aviation board to take the decision either way.” He said it is difficult to merge a listed company with an unlisted company.