IndiGo’s feuding promoters are putting off investors.
“This is not the right time,” Qatar Airways CEO Akbar Al Baker said yesterday (Nov. 7), referring to the Gulf carrier’s interest in investing in India’s largest airline. “There is some disagreement within the airline, so we will not comment on our plans for IndiGo till these issues are resolved,” Baker said during a press conference in Delhi.
The flag carrier of Qatar yesterday announced a one-way, code-sharing agreement with the budget Indian airline. According to the pact, Qatar Airways will now be able to book seats for its passengers on IndiGo flights between Doha and Delhi, Mumbai and Hyderabad.
IndiGo currently holds a 48% share of India’s aviation market but things have been rough lately. Among other things, the IndiGo co-founders’ spat has played out in headlines, and the company’s last reported financial results were extremely worrisome.
The differences between co-promoters Rahul Bhatia and Rakesh Gangwal came to the fore in July after the latter sought market regulator SEBI’s intervention to address alleged corporate governance lapses at the company. Bhatia denied the allegations and in October filed petitions in the US seeking evidence from Gangwal and independent director Anupam Khanna against the allegations.
Then, for the quarter ended Sept. 30, IndiGo’s parent firm InterGlobe Aviation posted a loss of over Rs1,000 crore ($14 million). The company blamed rising maintenance costs for the massive loss, especially because it had to make a provision worth Rs320 crore towards the maintenance of its older A320ceo aircraft. Besides, employee costs spiked as well, hurting profitability.
Baker’s comments, however, can be seen as a piece of positive news for IndiGo as he did not completely rule out the possibility of equity investment in the future.
Even as Qatar Airways is open to waiting out the storm at IndiGo, it has absolutely no interest in state-owned Air India, which has been on the block since 2017. “We have no interest in buying Air India, only, IndiGo,” Baker said.
Qatar Airways’s snub to Air India comes as the centre plans roadshows in Singapore and London to entice investors for the national carrier’s disinvestment.
The sale of Air India is crucial for the government as it hopes to meet its divestment target of Rs1.05 lakh crore for 2019-20. According to some media reports, it is planning to invite preliminary bids for stake sale in the airline this month.
A similar attempt of selling the state-owned carrier in the past had failed to invite even a single bidder.