Bangalore: Kingfisher Airline Merges with Air Deccan

PTI

Bangalore, Dec 20: In a mega merger, private carriers Deccan and Kingfisher Airlines on Wednesday decided to create a single corporate entity to cut down operational costs and accelerate their journey to profitability.

Boards of the two private airlines at a joint meeting took the unanimous decision after a presentation by management consulting firm Accenture, which highlighted the operational and marketing synergies and recommended their merger into a single entity.

"Air Deccan will continue to be listed incorporating the businesses of both Kingfisher Airlines and Deccan itself but the listed entity's name will be changed to Kingfisher Airlines," UB Group Chairman Vijay Mallya said on Wednesday night.

He said details of the merger, valuations and swap ratio would be done by KPMG, while Dalal & Shah were appointed to 'very quickly' come up with valuations and recommend merger structure.

The listed entity (which would be Kingfisher) would offer low fare service under the Deccan brand and premium services under Kingfisher brand.

"Hopefully, at the start of next year (April 2008), we should have one listed entity".

Mallya said the charter business of Kingfisher and Deccan would be independent in a separate entity.

UB Holdings held a 46 per cent stake in Deccan prior to the merger decision, and Mallya said the merged entity would be majority-owned by UB Holdings.

Mallya would be the Chairman and CEO of the merged entity, while Executive Chairman of Deccan, Capt G R Gopinath, Vice-Chairman.

Gopinath said Accenture was commissioned to come up with a comprehensive report on what needs to be done to get the operational and marketing synergies, bring down the cost of two airlines and give strategic and tactical inputs.

Mallya said the report highlighted how the two airlines can save a lot of money, bring down the cost of operation and accelerate the route to profitability by merging into a single entity.

"It (Deccan and Kingfisher) will be one company, and eligible to fly (internationally) in 2008," Mallya said.

He said one of the key elements of the Accenture report is route rationalisation between the two airlines. "It's not going to one (airline) at the cost of another".