Bangalore: Bangalore-based Deccan's board met today to consider a report by Accenture Ltd. on ``synergies'' with Kingfisher. The Vijay Mallya-owned UB Group bought a 26 per cent stake in Deccan in May and subsequently increased it to 46 per cent.

``The Accenture presentation to the boards said there was enormous synergy potential between the two airlines and how we could save money to bring down the cost of operations and accelerate the route to profitability,'' Mallya said.

He further said that the airline will merge with Deccan Aviation Ltd. to increase fleet size, affect cost savings and start overseas operations as early as next year. The announcement was made after the board meeting in Bangalore. The merged company will be traded as Kingfisher Airlines, Mallya, chairman of the UB Group informed the media.

Kingfisher, the merged entity, will retain both the Kingfisher and Deccan brands with Deccan continuing operations as a low-fare airline, Mallya said. The valuation and the swap ratio would be determined by KPMG and Dalal & Shah will be completed in about a month, said Ravi Nedungadi, president and chief financial officer of the UB Group.

Kingfisher earlier bought out Air Deccan, the country's largest discount carrier, in May this year.

Together, Kingfisher and Deccan, are now challenging Jet Airways India Ltd., the country's largest domestic airline. Jet Airways, in turn, merged with Air Sahara earlier on to affect synergies as well as affect cost savings. It followed sharp on the heels of a merger between two state-controlled airlines, Air India and Indian Airlines, who are now in the process of finalising their merger.

Meanwhile, Mallya said that UB Holding would own more than 51 per cent of Kingfisher after the merger process expected to be complete by March 31. The stock-swap ratio of the merger will be decided after the valuation is complete in four-five weeks.

According to Mallya, he will be the chairman and chief executive officer of the merged airline, while Capt GR Gopinath, Deccan Aviation's founder and chairman, will be the vice chairman of the merged company.

Confirming the development, Capt Gopinath said that Kingfisher will start overseas flights in August with initial services to the Middle East, followed by South Asian nations. Kingfisher will be piggybacking on the eligibility of Air Deccan to fly abroad, as the low-cost carrier has completed five years of domestic operations which qualifies it for international operations. On it's own Kingfisher would only be eligible in 2010.

In anticipation of its merger and government permission, Kingfisher has already ordered long-range aircraft, which would allow it to put brand new aircraft into service on international routes. It has ordered five of the double-decker Airbus A380s with options for five more.

The airline also plans to purchase 15 A350-800 XWBs, 10 A330-200s, five long- range A340-500s and 20 A320 series aircraft.