India to merge two state-run airlines by March

NEW DELHI - The Indian government on Monday said it was merging state-run carriers Indian Airlines Ltd. and Air India by the end of March as part of a wider strategy to take on nimble private players.

"Everybody feels the process of merger is appropriate," Civil Aviation Minister Praful Patel told reporters. "The merger process will be completed by March 31."

He added there would be no loss of jobs or salary cuts after the merger.

"The two airlines would gain 5 billion rupees ($166 million) annually after the merger," Patel said, adding the cost of the merger would be about 1.5 billion rupees to 2 billion.

The Indian government plans to make the new merged entity among the world's top 20 carriers.

Both international carrier Air India and domestic-focused Indian Airlines have ageing fleets compared with rivals such as Jet Airways Ltd. and Kingfisher Airlines Ltd.

- REUTERS