Manipal: UB Group owned Kingfisher Airlines and Deccan Airways have finally decided to merge with UB Group owning 69 per cent of Deccan Aviation Ltd after a recommended share swap takes place.

It is being given to understand that Deccan's board has approved the issue of three shares for every seven held in Kingfisher Airlines as part of the merger modality.

UB Group currently holds about 49 per cent of Deccan Aviation Ltd and almost the entire stake in unlisted Kingfisher Airlines.

Deccan Airways executive chairman GR Gopinath said on the sidelines of a function that a board meeting held in Bangalore on Thursday, which had representatives from both the airlines present, had passed a resolution to this effect. ''The Board has agreed to merge Kingfisher with Deccan Airways.'' Capt Gopinath said.

He also said that two valuators attending the meeting from both sides, KPMG and Dalal and Shaw, were currently working on the shareholding and assets of the new entity.

According to reports, Capt Gopinath also clarified that it will take two to three months to complete the process of the merger.

The airlines will function separately under a single entity and Vijay Mallya, chairman of Kingfisher, will become chairman of the new entity while Capt Gopinath will be the vice-chairman.

Deccan's Helicopter Wing would also keep its separate identity with Capt Gopinath continuing as chairman and chief executive officer. Mallya would be the vice-chairman.
The merged airline will operate two brands – Kingfisher, as a full service carrier, and Deccan, as a budget airline. The two entities are currently burdened with a combined loss of more than 20 billion rupees.

There are plans to sell shares worth up to $300 million.

The merger will create one of the biggest airlines in the country with a market share close to a third.

Deccan Aviation is also due to complete five year of operations in mid-2008, which will allow it to fly abroad. It will also allow Kingfisher to piggyback on Deccan's international license and serve international routes.