February 2, 2006: The proposed merger with Indian Airlines has prompted Air India to put off its IPO plans. The national carrier’s plan to tap the capital market has been deferred till the end of 2008 as it has now been decided that the state-run airline would float its IPO only after its merger with Indian, said reports.

The IPO, which was cleared by Air-India`s board of directors early last year, had aimed at planned to part-financing the acquisition of 68 new aircraft. However, with the airline has now tied up with ABN Amro for funding its aircraft acquisitions that would cost about $7 billion. According to reports, the airline is now availing $1.5 billion as the aircraft are being purchased in phases.

On the IPO, the Air India top brass have been reported as saying that the IPO has been decided to float it only after the merger of Air-India and Indian. As the merger process is likely to take 12-18 months to be completed, the IPO is not expected before end of 2008 at the earliest. It may be recalled that the public offer was slated for the middle of last year but was put off by a few months. Till a few months ago, there were reports it would be floated by end of this fiscal.