Indigo in Turmoil as Co-Founders Clash Over Control

Indigo in Turmoil as Co-Founders Clash Over Control
Written by Sourav
[email protected] | | Published on: May-16-2019 11:57 AM

Just a few days back, we spoke about Indigo is prospering even when everyone else in the Aviation industry is struggling. Well, Indigo has now been hit with its own set of struggles, which can potentially cause serious harm to the company in the long run if not handled properly. Co-founders Rahul Bhatia and Rakesh Gangwal are divided over the control of management of the airline, along with disagreeing over the appointment of key executives. The two have now approached law firms to seek a resolution of the issues.

Indigo was setup by Bhatia and Gangwal in the year 2006, with the company going public in 2013. At the time of going public, the two co-founders together owned a 99% stake in the company. At the moment, Bhatia is the owner of 38% stake and Gangwal is the owner of 37% stake in the parent company of the airline, Interglobe Aviation.

indigo airplane

Indigo Airplane-Source: Daily Hunt

The problem

In April 2018, CEO Aditya Ghosh exited the airline, and the co-founders are said to have been in conflict ever since. One of the main reasons behind the disagreements is in the hiring, where several expatriates have been hired in management positions. Most of these positions were filled by Gangwal, hiring executives from his previous company United Airlines, a step which caused major friction between the co-founders. Post the exit of Aditya Ghosh, the CEO post was filled by Ronojoy Dutta, formerly a president at United Airlines. However, the company had already shortlisted Gregory Taylor for the role, and Rahul Bhatia then had to take over as interim chief while things were smoothed over. Currently the top positions, CEO and CFO, are filled by Ronojoy Dutta and Rohit Philip, both of whom are former employees of United Airlines.

Another reason for the rift, according to sources, is said to be the steep fall in profit of the company. In the quarter from October-December, the net profit fell by 75% or ₹ 190 crore roughly. While the losses are being attributed to the slowdown in the aviation industry, rising ATF prices and the cutthroat competition, the co-founders seem to be battling each other to take control of the company and arrest the downslide.

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