Air India bid talk pulls down IndiGo's stock
NEW DELHI: Nervous investors showed their chagrin at budget carrier IndiGo’s expression of interest in on the block national airline Air India on Thursday, dragging down the stock nearly 6% on Friday, while the airline’s smaller peer SpiceJet clarified it was not interested in bidding for the national carrier.
IndiGo, on Thursday, had informed the aviation ministry it they would be interested in bidding for Air India, a day after the union cabinet decided to privatise the national carrier. On the BSE, the airline stock fell 5.82% to close at Rs 1164.95 on Friday.
IndiGo President Aditya Ghosh, in a letter to employees, clarified “Our interest in Air India is primarily in its international operations.
Over the past decade, we have created a significant domestic network and that gives us the confidence to build a world-class international airline in the scale and scope of some of the largest airlines in the world.”
“Without our domestic feed network, it just does not make sense to embark on this journey and if we do go down this path, it would require significant restructuring of the acquired operations. In that journey, we are not going to take on debts and liabilities that could not be supported by the new restructured operations,” Ghosh wrote in a letter to employees.
“Let me be very clear that if it is not profitable and does not add value to our employees, customers and shareholders, we will not embark on this journey,” the letter read. SpiceJet, another low-cost airline, which some sections of the media reported is likely to express interest in Air India, has however cleared the air.
“SpiceJet is too small to be able to bid for Air India,” SpiceJet CMD Ajay Singh told reporters. Singh was speaking at the launch of Spice Style Store in Gurgaon, which the airline expects will give a boost to its ancillary revenues.
“Ancillary revenues for a lowcost airline could go in excess of 25%. With such ventures, we are expecting our revenues to constitute at least 20% of the revenue,” Singh said.
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Via:: Economic Times – Stocks