The government has changed its plan for initial public offers of Indian and Air-India by deciding to go for a single float after the two airlines are merged next year, according to a senior civil aviation ministry official.
The group of ministers on the merger, due to meet on November 27, would take the final decision, the official said.
According to industry analysts, the long process of unification and the consequent IPO may put on hold the plans of the two airlines, who need money for fleet acquisition.
Indian has placed an order with Airbus for buying 43 A 320 aircraft for around $2 billion while Air-India has placed a $6.9 billion order with Boeing for 83 aircraft.
The two have to make advance payments for these buys. The government had earlier considered separate IPOs keeping in view the long time needed for the merger and two carriers' urgent need for funds.
According to analysts, the merger may take around a year to complete.
The merged entity will have around 150 aircraft and a balance sheet size of Rs 15,000-Rs 17,500 crore (Rs 150-Rs 175 billion). The government is of the view that a bigger balance sheet will enable a better valuation and help the merged entity raise more funds than what the two carriers will be able to raise separately.
According to sources, the GoM will consider the report on the merger by Accenture and give a final shape to the proposal. It will also decide the quantum of equity to be off-loaded.
