After strong statements to the contrary, UB Group chairman Vijay Mallya on Tuesday said that he was considering the merger of Kingfisher Airlines with budget carrier Simplifly Deccan (earlier Air Deccan), in which the former bought a 26 per cent stake in June.

Mallya said Kingfisher had asked consulting firm Accenture to study the integration of the two airlines, including the possibility of a merger.

"We have appointed Accenture to advise on the integration of the two airlines. We will take a future course of action after a report from it in the next six weeks," said Mallya.

"Accenture has been told to look at different ways of integration of the two airlines including the option of a legal merger," said Ravi Nedungadi, chief financial officer of the UB Group.

This is the first time that a legal merger between the two airlines is being considered.

However, Simplifly Deccan Chairman G R Gopinath said, "The mandate to Accenture is clear � it is about suggesting ways to integrate the operations of the two airlines. If it decides to recommend a merger, I will consider it at that time. I will do whatever is good for the company."

The UB Group had acquired 26 per cent in Deccan Aviation [Get Quote] for Rs 550 crore, valuing the company at Rs 2,200 crore. Under Securities and Exchange Board of India requirements, the group recently made an open offer of a further 20 per cent that would cost it Rs 420 crore.

Mallya had earlier said that Deccan could be made a subsidiary though it would retain its low-cost model.

Mallya also said that UB Holdings was planning to raise Rs 1,000 crore through qualified institutional payments, of which he would invest Rs 720 crore to maintain his shareholding in the group.

On international operations, Mallya said Kingfisher was planning to start operations to the US, West Asia and South East Asia by the middle of the next year using the Deccan licence.

Deccan will complete five years of domestic operations by the middle of the next year and will, thus, be eligible for international operations.

After the Deccan buy, the combine will be the largest domestic airline in India controlling a 32 per cent market share with a fleet of 71 aircraft, including 41 Airbus aircraft and 30 ATR aircraft.