VCCircle

In a significant move, the boards of low cost carrier Deccan Aviation and Kingfisher Airlines on Wednesday unanimously decided to merge both the airlines to form India's largest player in the domestic aviation business. The merged entity will be renamed Kingfisher Airlines, and will be operating two brands - Kingfisher and Air Deccan. The merger has been effected on the advice of management consulting firm Accenture which suggested that there are synergies to be tapped post-merger. This will also help Vijay Mallya's Kingfisher Airlines to fly abroad as the merged entity will qualify the condition that the airline has to be at least five years old to fly to overseas destinations.
Vijay Mallya, whose company holds 46 per cent in Deccan Aviation currently, will be the chairman and CEO of the merged entity while GR Gopinath, the founder of Deccan Aviation, will be its vice-chairman. The share-swap ratio of the merger will be decided in the next four to five weeks by accounting firms KPMG and Dalal & Shah. Kingfisher had acquired 46 per cent stake in Deccan Aviation earlier this year for about Rs 1,000 crore. It first acquired 26 per cent, and the remaining 20 per cent via open offer.
Both the airlines are currently making losses. Deccan Aviation reported a loss of Rs 419 crore for the year ended June 30, 2007, while Kingfisher Airlines had a loss of Rs 577 crore for the year ended March 31, 2007.
This is the second mega merger in Indian aviation business. The state owned airlines Air India and the domestic carrier Indian had merged this year.