An Indian low-cost airline IndiGo plans to sell its shares in order to raise as much as $409 million and mitigate the pandemic hit on its business. The announcement comes days after Qatar Airways hinted about a possible stake purchase of the Indian low-cost carrier.
The IndiGo board of directors agreed on the company’s plan to raise up to $409 million by selling the airline’s shares. The recent plan was rolled out amid the second wave of the COVID-19 virus infections in the country which has pushed back the expected gradual recovery of the demand for air travel.
Having been burning around $2 million of cash daily, initially IndiGo considered gaining as much as $544 million through a qualified institutional placement (QIP), where it was planning to issue shares to the public without going through standard regulatory compliance. But in January 2021, the company dropped the idea while preferring to raise money through sale and leaseback (SLB) transactions and other alternative measures.
Meanwhile, on May 4, 2021, Akbar Al Baker, the Chief Executive Officer of the Doha-based airline Qatar Airways, hinted that the company was interested in acquiring a stake in IndiGo. Al Balker outlined that since India remained a strategically attractive market for Qatar Airways to expand its influence on the region, the airline was interested in picking up stakes in the country’s largest domestic carrier.
However, Al Baker doubted whether the timing was right to take such a step given the global uncertainty in the market caused by the ongoing pandemic.
“We are keen to take a stake in IndiGo but I don’t think this is the right time,” Akbar Al Baker said at the time.
If Qatar Airways purchased a stake in IndiGo, it could gain beneficial access to the low-cost carrier’s network and expand its services with an additional 67 domestic IndiGo routes.