The newly-created holding company for national carriers Air India and Indian, National Aviation Company of India (Nacil), may offload 10-15% stake through an initial public offering (IPO) in 2008 to fund expansion and take on competition from private airlines, civil aviation minister Praful Patel said. The offer could involve issue of fresh shares and dilution in existing equity of Nacil.

"We are yet to take a view on the exact mode of equity dilution. Accenture and Ambit Finance, the consultants appointed to handle the merger, are now doing the valuation and we expect them to give a report by the year-end," Mr Patel said.

The IPO will be preceded by an offer of about 5% of equity to the 33,000 employees of the merged entity, Mr Patel said. Nacil, created in March, expects the integration process to be completed within two years. It has a paid-up capital of Rs 145 crore. It will fly under the Air India brand.

Air India and Indian have a combined fleet strength of 125 aircraft, about a third of the national total. They have ordered 111 more aircraft.

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