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Kindle Notes & Highlights
January 2017, Buffett’s total investment in four airline stocks (American, Delta, United and Southwest) had gone past $10 billion.
He may never have thought that President Trump would be a spoilsport by turning the strained relations with Iran into a crisis which, along with other factors, would shoot up the prices. He was not alone.
No oil expert or institution had predicted the kind of particularly sharp crude price rise that began from mid-2017.
The airline industry is amongst the most impacted by fuel cost. By January 2018, a year later, even Buffet had managed to lose more...
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However, in a controversial move, just a few days before the IPO, IndiGo’s promoters rewarded themselves with a hefty ₹1,500 crore dividend, which pushed the net worth of InterGlobe Aviation into the negative zone by ₹139 crores.
InterGlobe Aviation had doled out over ₹3,500 crores as dividend to its promoters and equity holders.183 Some analysts doubted if the company would be able to fetch the high valuation it had fixed as its net worth had turned negative.
On Tuesday, 27 October 2015, IndiGo’s IPO opened up. A day earlier, on Monday, IndiGo had already raised ₹832 crore by allotting shares to institutional investors185 such as Monetary Authority of Singapore, Goldman Sachs India Fund, Abu Dhabi Investment Council, Indus India Fund (Mauritius), Kuwait Investment Authority Fund 224 and Credit Suisse Singapore, at the upper price band of ₹765 per share.
That day was also considered to be the day of Lakshmi, the Goddess of wealth, by Hindus. Not surprisingly, IndiGo’s twin promoters Rahul Bhatia and Rakesh Gangwal had become ‘True Blue Billionaires’ on that same day.
Nonetheless, a grand welcome awaited IndiGo’s stocks when it began trading on 2 December 2015. Unlike many stocks which are artificially pumped up during the IPO phase and crash as soon as their trading begins (the real test of a stock’s worth), IndiGo’s share got a 21-gun salute from the stock market. Investors lined up to buy IndiGo’s shares on the first day of its trading, pushing its stock by 17.5 per cent to breach the ₹900 benchmark.187 In contrast, the stocks of Jet and Spice crashed further by 4.27 per cent and 5.09 per cent, respectively, on that day.188
I. Pilots’ Exodus
II. Service Deficiencies
IndiGo again hit the headlines for the wrong reasons on 11 April 2018, when it deplaned a surgeon for complaining about mosquitoes in the cabin! The incident led the new Civil Aviation Minister Suresh Prabhu to order a probe.
Between 15 March and 31 March 2018, IndiGo had to cancel more than 600 flights due to neo engine failures.209
Just like Herb Kelleher,219 the lawyer-turned CEO of Southwest, Ghosh would go on to steer IndiGo to incredible heights.220
Ghosh proved to be a fabulous implementer of well-laid-out strategies which were authored by founders Bhatia and Gangwal along with Ashby.
A law graduate from Delhi University, Ghosh was working on the travel and hospitality mandate with the top legal fi...
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he had come in contact with...
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In the process, Ghosh also learned a great deal about other verticals of airline business. He earned the confidence of both the partners who wanted a dynamic man to implement relentlessly what they had visualized and was a key reason for his elevation. Ghosh didn’t disappoint.
He went on to deliver on each count and grew in stature within the company and outside too. For many years, till he resigned, he was the face of IndiGo for media interactions, policy opinion, business outlook—almost everything—while the promoters preferred to shun the
limelight and guide the venture f...
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On Friday, 27 April 2018, IndiGo announced the exit of Aditya Ghosh stating that 31 July would be his last day with the airline.
I’ll be blunt with
that—those skill sets don’t exist in India.
I firmly believe an airline’s stock needs to be as fundamental as possible, with an annual return of what the growth levels are. This is around 20 per cent return, which is not bad.
Rahul Bhatia and Rakesh Gangwal, the men who scripted the most stunning success in Indian aviation, could also not have been more different from each other, somewhat akin to Steve Jobs and Steve Wozniak—the co-founders of Apple.
Personality-wise, Jobs and Wozniak were as different as chalk and cheese.246 And if Wozniak knew how to build a computer (he was the main guy who designed and developed Apple I and Apple II), Jobs knew how to market it. Rest is legend.
From an upstart in 2005, Rahul Bhatia and Rakesh Gangwal today are the Indian aviation’s true blue rock stars, much like Simon and Garfunkel—understated and unassuming,
