Bhatia family-controlled InterGlobe Enterprises (IGE) on Wednesday countered Gangwal’s charges about the airline entering into related party transactions (RPTs) with IGE Group companies. The Bhatia Group said these RPTs were disclosed at the time of IPO in 2015 and “materiality of the transactions for (IndiGo) is not significant as… it is only 0.53% of (IndiGo’s) consolidated turnover for FY 2018-19.”
IndiGo’s dumping of Pratt & Whitney’s (PW) snag-prone engines for Airbus A320 Neo aircraft may have been the breaking point for the airline’s feuding co-promoters. From inception in 2005, IndiGo has been mainly using PW engines and things were fine till the A320/21 new engine option (Neo) planes started arriving about three-to-four years back with PW’s new engines for this plane. IndiGo has been facing constant troubles with PW engines on the Neo.
On June 17, 2019, IndiGo — the world’s largest customer for Airbus 320/21 Neo — announced it is opting for CFM engines over PW engines for this plane. It placed an order worth $20 billion for CFM’s LEAP-1A engines for 280 A320 and A321 Neo planes.
Five days before the order was placed, on June 12, Bhatia wrote to IndiGo’s board saying: “…the hurt ego of Gangwal on realising that upon his refusal to lend his hand in the company’s ongoing negotiations with original equipment manufacturers (OEMs), the company had proceeded to make alternate arrangements for the purpose.”
The OEM being referred to, say sources, is PW. Right from IndiGo’s inception in 2005, Gangwal was the man with the expertise for placing aircraft and engine orders to build airline fleet, given his over three decade experience in several US carriers. Bhatia brought in travel knowledge of India and funds.
On Wednesday evening, IGE issued a statement saying: “For several decades, before IGAL (InterGlobe Aviation Ltd or IndiGo) was founded, IGE and its founders (Rahul Bhatia and family) have been involved in diverse areas of aviation industry, including provision of services to the aviation industry at large. This connect with, and experience in, the aviation sector was the fundamental reason for IGE to think about setting up an airline…. The IGE Group has nurtured and supported IGAL through its formative and expansion years by making available these services.”