IndiGo co-founder resigns, ending feud at top Asia budget airline

[MUMBAI] Rakesh Gangwal, the billionaire co-founder of IndiGo, stepped down from the company's board and announced plans to pare his stake, ending a years-long bitter shareholder dispute atop Asia's biggest budget airline by market value.

Gangwal will "slowly" reduce his stake in InterGlobe Aviation, which operates IndiGo, over more than five years, according to his letter to the board, which was sent to the stock exchanges Friday. Gangwal and his family hold almost 37 per cent in the Indian airline.

"I continue to be a big believer in the long-term prospects of IndiGo and more so now with industry consolidation underway," Gangwal wrote in the letter to the board.

His move removes the overhang over the airline, which posted a surprise swing to profit earlier this month, as people started flying again after two years of the Covid-19 pandemic that gutted global travel.

It also signals a truce in what was a years-long feud between Gangwal and his IndiGo's fellow co-founder Rahul Bhatia, whom he had accused of corporate governance lapses in 2019. The bitter public spat began over a 2015 shareholder agreement that Gangwal said gave Bhatia greater management control despite the similar size of their stakes.

Billionaire Bhatia, who owns almost 38 per cent in the airline, recently took on a newly-created executive position of managing director at the company. Shareholders voted to lift restrictions in December on transfer of shares - a rule tweak that paved way for Gangwal to sell his stake. Bhatia in his executive role will be focusing on expanding the airline in India and overseas. He will oversee all aspects of the airline, besides actively leading the management team, chairman Meleveetil Damodaran said in the statement earlier this month.

Gangwal, who in 2019 said he had no desire to take control of the airline, had flagged some of his corporate governance concerns to India's markets regulator. He had accused Bhatia of having "unusual controlling rights" that allowed him to push through board decisions "without basic governance protocols and laws being followed."

Once the chief executive officer at US Airways, Gangwal teamed up with Bhatia - a former airline sales agent - to create IndiGo in 2005. After its founding, the carrier quickly outpaced rivals and grabbed a dominant market share, making both founders billionaires. IndiGo, the country's largest airline which controls about 55 per cent of the market, is one of the few Indian carriers with enough firepower to aggressively expand its low-cost business model.

Gangwal told the company board on Friday that he now wants to take some of the winnings off the table as he sells his stake - Indigo shares have climbed more than 155 per cent in the last five years outpacing the benchmark S&P BSE Sensex. He is, however, keeping his options open, saying he may consider "participating again as a board member" sometime in the future. On his stake-paring plans to benefit from Indigo's stock rally, he said: "Like any plan, future events may impact my current thinking." BLOOMBERG