Friday, June 30, 2017

IndiGo punching above its weight in eyeing Air India? Analysts, investors seem unhappy with move

New Delhi: Within a span of less than 24 hours, domestic market leader IndiGo has emerged as a serious contender for Air India. Till the same time yesterday, the only tentative known buyer for the national carrier was the Tata Group. A source close to developments said “they are very serious about this” when asked about IndiGo’s unsolicited expression of interest in Air India. IndiGo President Aditya Ghosh wrote to Civil Aviation Minister A Gajapathi Raju yesterday, invoking nationalism by speaking of disproportionate Indian international traffic which the Gulf and South East Asian countries manage to attract. In the letter, Ghosh has also asserted his airline was best placed to buy Air India and that the target airline’s international operations are of prime interest.

Ghosh’s reasoning though, has failed to impress analysts, sector experts and investors. Will this be the right call for IndiGo, which has commanded respect for its integrated approach to domestic market leadership as a cost warrior? This Bloombergreport said the IndiGo shares continued to slide for a second day on the bourses. The scrip tumbled 5.2 percent to Rs 1,172.15 this morning, the biggest intra-day loss in five months. The two-day decline erased about $485 million or close to half a billion dollar in market value of IndiGo.
30/06/17 Sindhu Bhattacharya/First Post