Accenture moots 5 models for merger
Air-India-Indian Airlines merger is going to be a complementary one and not an overlapping one.
By ET EXCLUSIVE/MANIKA GUPTA, INDIATIMES NEWS NETWORK |
NEW DELHI: The merger of the two state-owned carriers, Air India and Indian Airlines is going to be a complementary merger and not an overlapping one. In its much-awaited roadmap submitted to civil aviation minister Praful Patel, the HR consultancy, Accenture, which was appointed by the government in July, has suggested five models for the merger.
The options proposed by the consultancy include: Indian Airlines getting merged into Air India, Air India being merged into Indian Airlines, a new entity, a holding company and last but not the least demerger.
"While demerger is ruled out, the other options have to be debated with their pros and cons", the minister told ET Online. Based on clear instructions from the minister that there should be no manpower rationalisation, the consultancy has suggested `careful integration' of manpower at various levels.
Fearing a backlash from the union of the two airlines, Patel while briefing the consultancy at the start had clearly said that "nobody should lose anything. If anything, they should gain."
Accordingly, the consultancy has suggested a top-to bottom integration of the employees. It is proposed that the pay-scales be revised to bring parity in promotion procedures. This is in view of the fact that there is a discrepancy in the promotion procedures of both airlines. While one follows time-bound promotion, the other does it on the out of turn also. As of now, the consultancy has proposed that the general pay-scales remain the same.
The options proposed by the consultancy include: Indian Airlines getting merged into Air India, Air India being merged into Indian Airlines, a new entity, a holding company and last but not the least demerger.
"While demerger is ruled out, the other options have to be debated with their pros and cons", the minister told ET Online. Based on clear instructions from the minister that there should be no manpower rationalisation, the consultancy has suggested `careful integration' of manpower at various levels.
Fearing a backlash from the union of the two airlines, Patel while briefing the consultancy at the start had clearly said that "nobody should lose anything. If anything, they should gain."
Accordingly, the consultancy has suggested a top-to bottom integration of the employees. It is proposed that the pay-scales be revised to bring parity in promotion procedures. This is in view of the fact that there is a discrepancy in the promotion procedures of both airlines. While one follows time-bound promotion, the other does it on the out of turn also. As of now, the consultancy has proposed that the general pay-scales remain the same.
As for the hierarchy of the merged entity, it has been proposed that it should consist of board members, Group CMD and CEOs' for ancilliary business units such as engineering, LCC, ground handling, integrated bsuinesses, MRO and others. It is proposed that members on the board of IA and AI should remain on the board of the merged entity and advocates complete involvement of the HR in the merger.
Asset sharing of the two companies will be on the basis of the models that the Cabinet finally approves. While both companies have more or less equal amounts of assets in valuation based in Maharashtra and Delhi, stamp duties and other levies will be dealt by the state government as it is a state government subject. However, all depends on the model that is chosen as both carriers have accumulated tax losses, but AI has more.
Patel has asked the consultancy to hold discussions with senior employees -- DGM and above of both airlines -- and solicit their suggestions before going to the Cabinet.
While the civil aviation ministry is doing its own study, early next week, the proposals will be presented before the inter-ministerial group comprising the finance minister, law minister, minister for PSBs, Montek Singh Ahluwalia and the civil aviation minister.
According to a member of the core group preparing the report, the roadmap has been prepared after studying eight models of merger across the globe including that of Lufthansa. He said that it may not be very complicated as the two airlines have more or less the same pattern.
The merger has to be completed within the next 16-36 months, and the proposed initial public offerings (IPO) will take place only after the companies are merged, Civil Aviation Minister Praful Patel said.
"Though we want to complete the process (IPO) within the first six months of this fiscal, there has been a suggestion that a merged entity would have a better valuation," Patel said.
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