IndiGo promoters clash over key hires, strategy
Barely a month after cash strapped Jet Airways was forced to stop operations, trouble seems to be brewing at another airline. The two promoters of IndiGo — Rahul Bhatia and Rakesh Gangwal have clashed over differences over the expansion and long-term strategy of the country’s largest airline as well as the appointment of key executives. Consequently, the two parties have engaged law firms to resolve the differences in the shareholders' clause.
The two founders are battling each other over control of the board and the company’s affairs with independent directors caught in the crossfire. Gangwal owns around 37 percent of InterGlobe Aviation, while Bhatia holds around 38 percent in the company.
It is no secret that the closure of troubled Jet Airways, besides the financial woes at Air India, has left a gap that provides an opportunity for other airlines. So while Bhatia prefers purchasing wide-bodied aircraft for international flights, Gangwal wants to stick to narrow-bodied Boeing 737. Gangwal thinks codeshare agreements with foreign airlines are a better option. The duo is also at loggerheads over board-level appointments.
As per reports, Bhatia and Gangwal have been in conflict since the exit of airline’s CEO Aditya Ghosh in April 2018. Coupled with that, the appointment of “expatriates in management positions”, who were majorly chosen by Gangwal from United Airlines (his former employer), also resulted in the tensions.
Consequently, Gangwal and Bhatia are now taking help from law firms J Sagar Associates and Khatian & Co, respectively, to iron out their differences. While the issue would first go to the board, however, if the dispute is not resolved, it could go before the National Company Law Tribunal.
Meanwhile, CEO Ronojoy Dutta has sent a communication mail to employees, assuaging them and saying that the airline's strategy will remain unchanged.
In his letter, Dutta assured employees stating, "Dear Fellow IndiGo Employees, I am sure that you are all aware of the press reports regarding alleged disagreements between out two promoters Mr Rahul Bhatia and Mr Rakesh Gangwal. I want to assure you that the growth strategy of the airline remains unchanged and firmly in places, and the management is fully charged by the Board to implement it."
Given the fact that the aviation sector in India is going through turbulent times, and IndiGo being the largest airline in the country, if the spat intensifies, it would be another big blow to the already struggling aviation sector.