Saturday, October 28, 2006

Air India, Indian merger may add Rs 1,200 cr to kitty

The proposed merger of Air India and Indian is likely to add around Rs 1,200 crore to the bottomline of the new entity through synergies between the two airlines.
Sources told Business Line that the report prepared by Accenture suggests that there could be a 3-4 per cent saving in costs and increase in revenue that initially could work out to be around Rs 600 crore and progress up to Rs 1,200 crore over the next two-to-three years.
"The major savings would come from route rationalisation, common sales distribution network and booking offices. Besides, the creation of a hub and spoke system would also help cut down on costs and increase the revenue of the merged entity.
The merger would lead to a manifold increase in the net profits with the two airlines reporting a combined net profit of Rs 84.79 crore during 2005-06, sources said.
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