AI-Indian merger may cost Rs 300 cr

The proposed mega merger of Air India and Indian would turn into a costly affair — with an estimated bill of Rs 300 crore — if the government does not provide tax breaks for the big fat wedding in the air. The merged entity would face an additional tax liability of Rs 256 crore in terms of unabsorbed depreciation and losses not carried forward. The unabsorbed depreciation works out to Rs 740 crore in the case of Indian while Air-India’s balance sheet has unabsorbed depreciation to the extent of Rs 20 crore.

In addition, stamp duty would add to the cost of merger since both AI and Indian have properties located across metros, according to highly-placed government sources. The merger will result in creation of Asia’s largest airline in terms of fleet size. The estimated cost of merging the airline is around Rs 300 crore and the final figure would vary on the basis of the route adopted for bringing the two government airlines together.

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