1. Not keen on buying Air India in government partnership: IndiGo

Not keen on buying Air India in government partnership: IndiGo

Promoters of low-cost airline IndiGo on Thursday said that they will not be interested in owning Air India in any kind of partnership with the government. Rahul Bhatia, one of the promoters of the Indigo in an analyst call said that the partnership model may be a good model but they don’t know it so […]

By: | New Delhi | Published: July 7, 2017 4:17 AM
Air India, Air India news, Air India latest news, indigo to buy Air India, indigo, rahul bhatia Bhatia alongwith co-promoter Rakesh Gangwal also reiterated that Indigo would be interested in owning the international operations of Air India and its low cost subsidiary Air India Express. (Reuters)

Promoters of low-cost airline IndiGo on Thursday said that they will not be interested in owning Air India in any kind of partnership with the government. Rahul Bhatia, one of the promoters of the Indigo in an analyst call said that the partnership model may be a good model but they don’t know it so it is ruled out from their side. Bhatia’s remarks came in the context of speculation that the government while divesting its majority stake in Air India may choose to retain a minority stake, either 26% or 49%. Bhatia alongwith co-promoter Rakesh Gangwal also reiterated that Indigo would be interested in owning the international operations of Air India and its low cost subsidiary Air India Express. The duo said that carving out the two from Air India’s current operations and selling it was possible since it has happened globally with some other airlines. They said that buying the international operations of AI fits with their plan to expand their low-cost model in the international long haul market. However, if the government sells Air India in one piece they would still be interested in buying it but that would bring lot of challenges and issues and feasibility would have to be examined.

According to the promoters, on the back of its vast domestic network IndiGo plans to fly on the long haul network either by acquiring the international operations of Air India and or by itself. “We cannot own the whole of Air India all by ourselves since that will be a herculean task given the debt involved. With the domestic network we have it makes perfect sense to start our long haul operations. With indigo it will always be a low cost model,” Bhatia said.

“Air India has some prime slots in some of the busiest airports across the world, acquired over the years when getting slots was easier and aviation industry was at a nascent stage. We will not be able to replicate that in the near future,” explained Rakesh Gangwal.

The founders also emphasized that if Indigo were to buy the international operations of Air India then three aspects of the operations- leasing operations, employees associated with the international operations and cash generated by the AI from future ticket sales – will become very important.

In terms of consequent increase in working capital after the acquisition, the owners said that the focus will always be on remaining asset light since Indigo has till date not borrowed for daily operations of the airline and the endeavour would be to continue like that.

Last week the civil aviation ministry had said that IndiGo had sent an unsolicited offer to buy Air India. This followed the Union Cabinet’s in-principle nod to divest Air India. However, the modalities of the sell-off are yet to be finalised, which would be deliberated by a group of ministers headed by finance minister Arun Jaitley. IndiGo currently commands a 40% share of the Indian market, the world’s third–largest and fastest growing.

  1. No Comments.

Go to Top