IndiGo Founders May Be Close To Settling Dispute

IndiGo founders Rahul Bhatia and Rakesh Gangwal could be close to resolving an ongoing dispute since 2019. The war of words has cast a shadow over the airline’s expansion and investor confidence. However, the pair have called for an extraordinary-general meeting (EGM) on 30th December to lift key share restrictions, possibly ending the dispute.

As IndiGo enters a newly competitive market, resolving ownership issues is crucial to its success. Photo: Getty Images

Almost there

According to Moneycontrol, IndiGo founders Rahul Bhatia and Rakesh Gangwal could end their bitter dispute at an EGM later this month. The meeting will see the passing of new rules to scrap powers that allow one founder to prevent the other from selling his shares without having the right of first refusal or forcing the buyer to take equal shares from both owners.

IndiGo Founders May Be Close To Settling Dispute
The EGM will clear any share transfer restrictions that exist on IndiGo’s founders. Photo: Getty Images

This would mean either founder can sell his shares in IndiGo to any interested party without needing to first present the offer to other. While nothing is confirmed, rumors suggest that Gangwal could be looking to sell part of his stake, allowing Bhatia to take an even larger share of the airline. Currently, the former owns 37%, while the latter holds 38%.

Big move

If the change in rules occurs, it would be a huge boon for IndiGo. Despite the dispute not directly affecting management, there have reportedly been power struggles over senior appointments and the airline’s future growth plans. While the impact on the airline is uncertain, it has not kept investors happy.

Now, with both parties calling for the EGM, there is a real chance that the dispute might be over. This will ensure stability at IndiGo and likely return full market confidence in the country’s largest carrier. However, nothing is settled yet, and the next few months will be important for any changes.

IndiGo Founders May Be Close To Settling Dispute
The news will be a positive step for IndiGo as it makes a recovery from the pandemic. Photo: Getty Images.

The decision to settle comes after four years of public exchanges and a legal case before the London Court of International Arbitration (LCIA). In September, the LCIA ruled that while Gangwal owers Bhatia $25,000 for defamation, the share transfer rules must be amended by IndiGo.

Recovery

While there might be some turmoil inside, you couldn’t tell by IndiGo’s performance. The airline remains dominant in the domestic market, with a market share of over 53% as of November. With its closest competitor 40% behind, you may think there is little to stop the airline. However, there are changes coming.

The first will be the formation of Tata Air India, which could see several carriers come together. This will pose a threat to IndiGo and has already forced the low-cost carrier to make some changes. With a real Number 2 in the market, the airline will have to fight for its place. Meanwhile, startup Akasa Air plans to expand in the ultra-low-cost segment, causing IndiGo to look in that direction as well.

The next year will see IndiGo perform a balancing act as it tries to maintain its dominance in the domestic market. Having one less headache will definitely be a bonus.

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