India's biggest airline by market share, IndiGo, is headed towards more trouble with differences between co-founders Rahul Bhatia and Rakesh Gangwal. The Rahul Bhatia camp will question Gangwal about his "exclusive parleys" with engine maker Pratt & Whitney (PW) ahead of the airline's latest engine order, said a media report. Though PW has been the engine supplier for IndiGo's Airbus planes, the latest $20 billion order was given to rival CFM - a joint venture between GE and France's Safran - after a competitive bidding process.
"The board is examining whether Gangwal complied with his fiduciary duties, as director, to keep it informed of developments related to aircraft, spares, and OEM (original equipment manufacturer) purchases," Economic Times reported. IndiGo had finalised the order with PW for 150 Airbus A320 neo planes of an outstanding order book of 280 planes. The $20 billion order was for the remaining planes, though the reason for a change of vendor was not clear. There were suggestions that the airline was influenced by the reported malfunctioning of some of the A320 neo engines.
"Within a fortnight, Gangwal wrote back to board members in an email communication that the competitive bidding process would be a lame idea as he had been told by PW that they will not participate in an RFP process, if the terms are changed," added the report, citing a source close to Bhatia's IGE Group. PW eventually participate in the IndiGo bidding process.
The board members may call Gangwal to explain why he "kept the critical market intelligence to himself and not inform the board of his exclusive parleys with PW." In a letter to the board on June 12, Bhatia had written that on realising Gangwal's 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 report went on to say, "In hindsight, however, the company will remain eternally grateful to Gangwal for having attempted to hold the company's business to ransom (by purposely delaying the ongoing negotiations with OEMs), as this paved the way for the company to institutionalize an area of operations which Gangwal had kept as his exclusive preserve."