Billionaire Bhatia to helm IndiGo after surprise swing to profit

[NEW DELHI] Rahul Bhatia, the billionaire co-founder of IndiGo, is taking on a newly-created executive position of managing director at the company, after the biggest budget carrier in Asia by market value posted a surprise quarterly profit.

The appointment of Bhatia, which is effective immediately, signals a truce with fellow co-founder Rakesh Gangwal, who had accused Bhatia of corporate governance lapses.

The founders were embroiled in a bitter public dispute over a 2015 shareholder agreement that Gangwal said gave Bhatia control over IndiGo despite the similar size of their stakes.

Shareholders of IndiGo, operated by InterGlobe Aviation, in December voted to remove restrictions on transfer of shares that will allow Gangwal to sell his stake.

Bhatia will now focus on expanding the airline in India and overseas, and build the carrier for the long term, IndiGo said in a statement to stock exchanges on Friday (Feb 4).

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, the biggest airline in India said it swung to a quarterly profit, as more people took to the skies after the nation emerged from the most devastating phase of the coronavirus pandemic.

The carrier posted a profit of 1.3 billion rupees (S$23.4 million) in the 3 months ended Dec 31, compared with a deficit of 6.3 billion rupees a year earlier, according to a statement on Friday.

The average forecast from analysts was for a loss of 4.15 billion rupees. Revenue stood at 92.95 billion rupees, an increase from 49.1 billion rupees a year ago.

Indian carriers had started to bounce back from the worst of the pandemic last year, with the government allowing local airlines to operate at full capacity as infections ebbed in most places.

The emergence of Omicron threatens that recovery, with carriers cutting back on capacity as demand starts to plummet once again.

IndiGo warned its capacity will reduce by about 10-15 per cent in the current quarter, compared with the three months ended December. It expects passenger traffic and revenue environment to improve once new infections start receding, according to the statement.

Buoyed by the early signs of a recovery, IndiGo chief executive officer Ronojoy Dutta in November said the carrier is 'unlikely' to raise funds through a share sale to institutional investors as previously planned.

IndiGo, which is the world's biggest customer for Airbus's best-selling A320neo jets, is planning to expand international capacity to 40 per cent in five years from 25 per cent by flying to new overseas destinations in the seven-hour range, he said at the time.

Total cash at IndiGo, Asia's biggest budget airline by market value, stood at 173.2 billion rupees, while its debt rose 27 per cent to 351.5 billion rupees compared with a year ago. Yield - a measure of fares and pricing power - rose 19 per cent.

The company is optimistic about the yield environment and doesn't see it declining, Dutta said in an analyst call on Friday. BLOOMBERG