Rahul Bhatia, the co-founder and largest shareholder in IndiGo airlines, is evaluating a bid for bankrupt Australian carrier Virgin Australia, which has grounded most of its flights. Virgin Australia went into administration in April as the airline floundered under debt of $4.8billion, which was worsened by the coronavirus situation. Virgin Australia had hired insolvency specialist Deloitte to oversee its future.
Virgin Australia was Australia's second-largest airline, employing about 16,000 people. Virgin Australia operated 130 aircraft to 41 destinations, most of them domestic services. It was described as the first large airline to collapse under the strain of coronavirus disruption.
On Monday, IndiGo had denied a report in the Australian Financial Review that claimed the airline was looking to buy Virgin Australia. Bloomberg reported the proposal was being prepared not by IndiGo, but its holding company, InterGlobe Enterprises.
Bloomberg reported, "Virgin Australia has attracted at least 20 potential buyers as its administrator, Deloitte, races to sell the airline within two months of its collapse. Deloitte is seeking indicative bids by Friday and binding offers in June, targeting a deal by the end of that month."
The reports of interest in Virgin Australia come at a time when IndiGo and other Indian airlines are themselves struggling with the collapse of passenger flight operations in India due to the coronavirus situation. IndiGo had announced pay cuts of up to 25 per cent and leave without pay for senior employees until July. The pay cuts were to remain in effect through the 2020-21 financial year.
Economic Times quoted an executive from another airline who described potential interest in Virgin Australia would be a "bizarre distraction" for IndiGo, "which would compromise their war chest" in times of COVID-19. The executive speculated IndiGo may be interested in Virgin Australia as a place to deploy the additional A320 aircraft it has on order.
