Omicron has cast a shadow of uncertainty on growth outlook: IndiGo CEO

However, the airline is stronger now when compared to situation in 2020 during the first wave of the pandemic, says Ronojoy Dutta

The fast spreading Omicron variant of Covid-19 has cast a shadow of uncertainty over our revenue forecast, Ronojoy Dutta, chief executive officer of India’s largest airline, IndiGo said on Thursday.

“Domestic traffic has rebounded strongly during November and December. Omicron has caused future bookings to soften somewhat but these still remain above the September levels. While international capacity is restricted, bubble flights to international destinations are performing well,” Dutta said while responding to shareholder queries at the company’s extraordinary general meeting (EGM) on Thursday.

The EGM was called by the airline’s promoters to seek shareholder nod for scrapping a clause in the articles of association, which gives them the right of first refusal over acquisition of each other’s shares.

Dutta listed various steps IndiGo took since the onset of the pandemic and said the airline is structurally stronger now when compared to March 2020. The airline is on the way to recovery provided there is no third Covid wave, he said.

The CEO of IndiGo said the airline has gone through turbulent times, incurred significant losses and taken debt to shore up its balance sheet. “Repairing the balance sheet is an urgent task,” he said.

“During the two years the focus has been building the domestic network, on returning inefficient planes at the rate of 45 a year and replacing them with efficient Airbus A320neo aircraft, improving levels of customer service and on building our charter and cargo business. Despite the low level of revenue generation over the last two years we can confidently state we are emerging from Covid-19 crisis structurally stronger as an airline,” he said.

Together, the two promoters Rahul Bhatia and Rakesh Gangwal own 74.44 per cent stake in IndiGo.

The call for the EGM follows a London Court of International Arbitration’s September order which directed an amendment to the AoA to scrap the clause regarding RoFR. The London court had granted the parties 90 days to implement the order.

In October, Gangwal had moved Delhi High Court seeking directions for calling the EGM. However, the court disposed of his petition.

The agreement between the promoters provides for an RoFR and tag-along rights over acquisition of each other’s shares. This clause was to be valid for four years from the listing of the airline in 2015. However, the clause was not scrapped in 2019 since the two promoters were locked in bitter dispute over corporate governance issues in the airline.

The differences between the promoters became public in July 2019 after Gangwal wrote to the Securities and Exchange Board of India, seeking its intervention to address corporate governance lapses at the company. Bhatia’s IGE Group had rejected the allegations. In 2019, both sides initiated arbitration to resolve the dispute.