(Bloomberg) -- IndiGo, India's biggest airline, fell the most in a year amid reports its billionaire founders have hired law firms after differences cropped up between them.
Rahul Bhatia and Rakesh Gangwal are trying to sort out disagreements about the carrier's future strategy and clauses in the company's shareholder agreement, the Economic Times newspaper reported on Thursday, citing unnamed people close to the development. Legal firms Khaitan & Co and J Sagar Associates are working with the founders to find a solution, the newspaper said.
The growth strategy of the airline “remains unchanged and firmly in place,” Chief Executive Officer Ronojoy Dutta said in an email to employees, which was seen by Bloomberg. Representatives for IndiGo declined to comment.
Shares of InterGlobe Aviation Ltd., which operates IndiGo, slid 9% to 1,464.90 rupees in Mumbai on Thursday, their biggest drop since last May. The stock, which closed at an all-time high on Wednesday, has gained about 26% so far this year.
“Investors are likely jittery with the news-flow and want clarity on future strategy -- does it stick to its core domestic market or embarks on an aggressive international push which could prove costly,” said Rahul Kapoor, a Singapore-based analyst at Bloomberg Intelligence. “We do not see any operational or earnings impact.”
Founded in 2005 by former US Airways CEO Gangwal and former airline sales agent Bhatia, IndiGo has quickly outpaced its rivals to grab almost half of the local market, making both founders billionaires. IndiGo is one of the few Indian carriers with enough cash to aggressively expand, and it's been mapping out a way to build a long-haul, low-cost business to take passengers from places like New Delhi to London.
To contact the reporter on this story: Anurag Kotoky in New Delhi at akotoky@bloomberg.net
To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net, Candice Zachariahs, Anto Antony
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