Rahul Bhatia, the billionaire co-founder of IndiGo, is taking on a newly created executive director position at the company after Asia’s largest budget airline by market value posted a surprising quarterly profit.
Mr Bhatia’s appointment, effective immediately, marks a truce with co-founder Rakesh Gangwal, who had accused Mr Bhatia of corporate governance abuses. The founders were embroiled in a bitter public dispute over a 2015 shareholder agreement that Mr Gangwal said Mr Bhatia controlled IndiGo despite the similar size of their holdings.
Shareholders of IndiGo, managed by InterGlobe Aviation Ltd., voted in December to lift restrictions on share transfers allowing Mr Gangwal to sell his stake. Mr Bhatia will now focus on expanding the airline in India and abroad, and building the airline for the long haul, IndiGo said in a statement to the exchanges on Friday.
Mr Bhatia will oversee all aspects of the airline and actively lead the management team, Chairman Meleveetil Damodaran said in the statement.
Earlier in the day, India’s largest airline said it posted a quarterly profit as more people took to the skies after the country emerged from the most devastating phase of the coronavirus pandemic.
The airline posted a profit of 1.3 billion rupees ($17.4 million) in the three months ended Dec. 31, compared to a deficit of 6.3 billion rupees a year earlier, according to a statement released Friday. The average analyst forecast was a loss of 4.15 billion rupees. Turnover was 92.95 billion rupees, an increase from 49.1 billion rupees a year ago.
Indian airlines began recovering from the worst of the pandemic last year, with the government allowing local airlines to operate at full capacity as the number of infections ebbed in most places. The rise of ommicron threatens that recovery, with carriers shrinking capacity as demand begins to fall again.
IndiGo warned that its capacity will decrease by about 10 to 15 percent in the current quarter, compared to the three months ended December. It expects passenger traffic and the revenue environment to improve once new infections begin to decline, the statement said.
Buoyed by the first signs of recovery, Ronojoy Dutta, IndiGo’s chief executive officer, said in November that the airline is “unlikely” to raise funds through a share sale to institutional investors, as previously planned. IndiGo, the world’s largest customer for Airbus SE’s best-selling A320neo jets, plans to expand international capacity from 25 percent to 40 percent in five years by flying to new overseas destinations in the seven-hour range, he said at the time.
Total cash of IndiGo, Asia’s largest budget airline by market value, was rupees 173.2 billion, while debt rose 27 percent to rupees 351.5 billion compared to a year ago. Yields — a measure of rates and price power — rose 19 percent.
The company is optimistic about the yield environment and does not see it abating, Mr Dutta said in an analyst meeting on Friday.