Mumbai: Air-India's proposal 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.

The IPO, cleared by Air-India's Board of Directors early last year, was planned to part-finance the acquisition of 68 new aircraft.
Air-India has now tied up with ABN Amro for funding its aircraft acquisitions that would cost about US$. It is now availing US$ 1.5 billion as the aircraft are being purchased in phases.

"We were finalising our plans for the IPO but now it has been decided to float it only after the merger of Air-India and Indian," Air-India Chairman and Managing Director, V Thulasidas, told sources.

As the merger process is likely to take 12-18 months to be completed, the IPO is not expected before end-2008 at the earliest.

The IPO was earlier 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.

Thulasidas said there was some rationale in deferring the IPO till the merger was completed as it would confer significant value to investors.

 "Besides, the IPO would be of a much bigger airline," he added.