Promoters of India’s largest airline IndiGo — Rahul Bhatia and Rakesh Gangwal — have appointed separate law firms to settle a dispute between the two pertaining to management control and appointment of key executives at the carrier, sources told The Indian Express. Bhatia and Gangwal did not respond to e-mail queries at the time of going to press.
As of March 31, Rahul Bhatia held 38 per cent stake in Interglobe Aviation, the parent company of IndiGo, while Gangwal held 37 per cent share in the company. The airline was founded by Bhatia and Gangwal in 2006, and at the time of the company’s listing in 2013, both of them held 99 per cent stake in the IndiGo.
According to one source, the tension between the two promoters have been simmering since exit announcement of the airline’s CEO Aditya Ghosh in April last year and the consequent appointment of expatriates in management positions. A chunk of the expatriate executives at IndiGo, the source said, were handpicked by Gangwal from his former employer — United Airlines. Announcing Ghosh’s resignation last year, IndiGo had earmarked Gregory Taylor to eventually become CEO, while Rahul Bhatia had taken charge as interim chief of the airline. However, in January this year, Rono Dutta, a former United president took over the executive reins of the budget carrier.
Over a period of two years leading to Ghosh’s exit, expatriates had joined the airline across various roles including Wolfgang Prock-Schauer as chief operating officer, Willy Boulter as chief strategy officer, Michael Swiatek as chief planning officer and Jason Herter, vice-president, operations control centre and dispatch. Currently, Dutta who is the CEO and Rohit Philip, the chief financial officer of IndiGo are former United executives among the top management positions at the airline.
In addition to the appointment of management personnel, it is learnt that IndiGo’s recent financial performance has also been one of the points of contention between Gangwal and Bhatia. For the December-quarter of 2018-19, IndiGo reported a 75 per cent fall in net profit at Rs 190.90 crore.
The company had attributed the fall in profit to high fuel prices and currency depreciation during the quarter. In the preceding three-month period, the airline posted a loss of Rs 652.13 crore, its first time being in the red since IndiGo went public. Interglobe Aviation is expected to declare its results for the March-quarter and full-year 2018-19 on May 27.
Industry experts have also pointed out how recently IndiGo, despite having a significant capacity, was not able to make the best of Jet Airways’ collapse and lost the race in acquiring some of the prime slots across the country to its rival SpiceJet.
On Wednesday, shares of Interglobe Aviation ended trading at Rs 1608.55, up 2.93 per cent from its previous close on the BSE.
Airline founded by both in 2006
* As of March 31, Rahul Bhatia held 38% stake in Interglobe Aviation, the parent company of IndiGo, while Gangwal held 37% share in the company
* The airline was founded by Bhatia and Gangwal in 2006, and at the time of the company’s listing in 2013, both of them held 99 % stake in IndiGo