You are using an older browser version. Please use a supported version for the best MSN experience.

IndiGo not sold on Air India stake purchase

LiveMint logoLiveMint 30-06-2017 Tarun Shukla

New Delhi: InterGlobe Aviation Ltd, which owns IndiGo, will not go ahead with an Air India stake purchase if it were to conclude that it would be unprofitable, company president Aditya Ghosh said.

“Let me be very clear that if it is not profitable and does not add value to our employees, customers and shareholders, we will not embark on this journey,” Ghosh wrote in a late Thursday message to employees, a copy of which was seen by Mint.

“At the same time, we recognize that the Indian government is taking a big, much needed decision and it is important that this decision is always remembered as a huge success.”

IndiGo, India’s largest budget airline, became the first suitor to express interest in buying a stake in Air India, just hours after the federal cabinet on Wednesday approved a proposal to privatize the state-run carrier.

IndiGo shares fell 5.82%, extending their drop of 2.05% on Thursday, to Rs1,164.95 on Friday, a day the BSE’s benchmark Sensex gained 0.21% to 30,921.61 points.

IndiGo has been a consistent profit-maker although in the latest fiscal year, which ended on 31 March, its profit declined 16.5% to Rs1,659 crore, mainly because of more expensive fuel.

In his message, Ghosh said IndiGo’s interest in Air India was driven by its international ambitions.

“Our interest in Air India is primarily in its international operations,” Ghosh wrote.

“Over the past decade, we have created a significant domestic network and that gives us the confidence to build a world-class international airline in the scale and scope of some of the largest airlines in the world,” Ghosh added.

IndiGo, led by aviation entrepreneurs Rahul Bhatia and Rakesh Gangwal, controls about 40% of the domestic market and about 3% of the international market, with a fleet of 136 planes.

Air India has the largest fleet of long-haul planes in its fleet of 140 aircraft, flying to 41 international and 72 domestic destinations. It has a domestic market share of 14% and a 17% share on international routes, the largest for any Indian airline.

IndiGo wants to take over the international operations of Air India and its affiliate Air India Express, but will also be open to buying its domestic operations, Mint reported on Friday, citing a person who has seen the expression of interest submitted by IndiGo.

Ghosh wrote in his message: “Without our domestic feed network, it just does not make sense to embark on this journey and if we do go down this path, it would require significant restructuring of the acquired operations,”

“In that journey, we are not going to take on debts and liabilities that could not be supported by the new restructured operations,” he added.

The aviation ministry said on Thursday that it won’t reply to the unsolicited expression of interest by IndiGo, which would be welcome to make a bid when global tenders are floated.

More From LiveMint

image beaconimage beaconimage beacon