National carrier Air India is unlikely to launch an initial public offer before 2009 until full integration of the two merged state-run airlines, but it may give stock options to employees ahead of the issue.

"Our consultant, Accenture, has given a 12-18 month road-map for full integration of the merged identity and an IPO is unlikely to take place before then," Air India's Chairman, V Thulasidas, told PTI in Mumbai.

However, a proposal to offer stock options to its 34,000 employees may fructify ahead of the IPO and a concept paper for this purpose has already been submitted to civil aviation ministry, he said.

The two airlines, Air India and Indian, were merged in July-August this year and 12-18-months for full integration would mean that an IPO would not take place before mid-2009, Thulasidas hinted.

If the recommendations of the concept document are accepted, it is quite likely that ESOP could be given before the IPO, he indicated.

As per the proposal, the newly-created holding company for the merged identity, National Aviation Company of India Limited, is expected to offer 5 per cent of equity to its employees. In the IPO, the proposal is to off-load 10-15 per cent to raise funds for expansion.

The IPO could involve an issue of fresh shares and dilution of existing equity of NACIL.

Union Civil Aviation Minister Praful Patel had recently said the government was yet to take a view on the exact mode of equity dilution and that Accenture and Ambit Finance, the consultants, were doing the valuation and were expected to submit their report by this year-end.

The merged identity has a fleet strength of 134 aircraft at present, some of which are to be phased out after the acquisition of new aircraft.

Before merger, Air India had placed an order for 68 Boeing aircraft and Indian for 43 Airbus jets, which together puts the acquisition of the merged entity at 111 aircraft. 

Airbus acquisitions, comprising Airbus A320s, 319s and 321s, would be completed by 2010. The acquisition of Boeing jets, comprising 737-800s for Air India Express and Boeing 777 ERs and LRs for long-haul operations and Boeing 787 Dreamliners, would be completed by 2011.

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