Friday, July 07, 2017

IndiGo says keen only on Air India's international, low-cost units

India's biggest airline IndiGo said on Thursday it was keen to buy state-owned carrier Air India's international arm and low-cost division Air India Express rather than the whole business if India decides to sell its flag carrier.

"Air India's international operations would bring a very important element to our network," Rahul Bhatia, co-founder of IndiGo, said on a call with investors. "It would provide rapid entry into restricted and in some cases closed international markets."

IndiGo, owned by InterGlobe (INGL.NS), last week expressed interest in buying a stake in state-owned Air India, after India's cabinet gave "in-principle" approval to privatize the carrier.

Shares in IndiGo fell as much as 5.6 percent the day after this announcement, with analysts citing concern about such an investment given Air India's heavy debt burden.

"We continue to like Indigo for its efficient cost structure and balance-sheet strength. However, potential acquisition of AI may create an overhang on the stock," Joseph George, analyst at brokerage firm IIFL, said in a note published last week.
06/07/17 Aditi Shah/Reuters