Shares in InterGlobe Aviation, which operates India's largest airline IndiGo, tumbled 9 percent on Thursday following a report its co-founders and two largest shareholders were squabbling over how the airline should expand.
The Economic Times, citing sources close to the matter, reported on Thursday that serious differences had arisen between the airline's co-founders that could affect the functioning of the company.
It said among the issues were clauses in the shareholders' agreement and differences between the founders over their strategies and ambitions for the airline.
Co-founders Rahul Bhatia and Rakesh Gangwal, along with their respective families, each control stakes of slightly less than 40 percent in the airline's holding company, giving them both a major say in its strategy and plans.
Indigo declined to comment. Bhatia did not respond to requests for comment, and Gangwal was not immediately reachable for comment.
"Obviously this is a matter of concern for shareholders. If it doesn't get resolved quickly and amicably it could lead to a loss of shareholder value as we have seen in other companies," said Shriram Subramanian, founder of InGovern, a proxy advisory firm-.
Similar boardroom disputes roiled Indian IT services company Infosys and salt-to-software conglomerate Tata Sons in 2017. The disputes, which played out in a public war of words at the time, dented the images of both companies and caused major disruptions for their management teams.
Shares in Interglobe fell nearly 10% on Thursday, before closing down 9.03% at 1,464.90 rupees.
The turmoil at Indigo comes at a time when India's aviation sector has been roiled by the collapse of Jet Airways, which has sent travel prices soaring. Jet, once India's largest private carrier, was crippled by mounting losses as it attempted to compete with low-cost rivals IndiGo, SpiceJet and Wadia Group-owned GoAir.
IndiGo, SpiceJet and GoAir have been rushing to fill the vacuum left by Jet and gain control of its valuable slots. Some have also been scrambling to hire former Jet pilots, cabin crew and engineers, while looking to lease planes that have been repossessed by Jet's lessors.