The billionaire behind India's largest airline IndiGo is reportedly making a tilt at Virgin Australia, which if successful would see Virgin return to its low-cost roots.
While IndiGo isn't to be confused with US private equity firm Indigo Partners, which is also circling Virgin, their names are not the only similarity: both companies are champions of the 'ultra low-cost' model where passengers pay for a seat and nothing else.
This approach has helped IndiGo become the largest airline in India, counted by passengers carried as well as fleet size, and hold a dominant 48% domestic market share – and now, IndiGo's founder and largest shareholder Rahul Bhatia is keen to throw his $5.3bn hat into the bidder's ring.
The Indian aviation tycoon will join a score of suitors seeking to capitalize on Asia’s first airline casualty from the coronavirus pandemic, people with knowledge of the matter said.
The proposal is being prepared by Bhatia’s private holding company InterGlobe Enterprises, which is understood to be the vehicle for the Virgin bid, and doesn’t involve IndiGo, whosde CEO Ronojoy Dutta this afternoon issued a statement denying the airline had expressed an interest in Virgin Australia, saying "IndiGo has not formulated any indicative proposal, nor does it have any interest in this matter.“
IndiGo flies mostly Airbus A320neo and A321neo jets, with the later opening up new routes to Europe, with hundreds of longer-legged A321neo LR and XLR aircraft on order. These are all fitted with economy class from tip to tail, with a handful of 'premium' extra legroom rows.
The first round of proposals by Virgin's would-be buyers is due this Friday, May 15 and will give Deloitte – and Virgin Australia itself – a clearer picture of its currently clouded future, including what form the airline might take – and how large its headcount, fleet and route network will be – when it returns to the skies under new ownership.
Airline-appointed administrator Vaughan Strawbridge of Deloitte has previously indicated that 20 "interested parties" were scoping out the sale, and Friday's deadline will reveal which of those parties have coalesced into a smaller number of heavy-hitting consortia.
Friday's first round of "non-binding indicative offers" will need to be shaped into "serious, binding offers" by the middle of June, from which the winning consortium will be chosen.
"We remain confident that our target of achieving a sale by the end of June is achievable" Strawbridge has said.
Additional reporting by Bloomberg