Go First owner has no plans to exit airline: CEO
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Go Airlines (India) Ltd owner Wadia Group is completely committed to the airline and had no plans to exit it, the airline's chief executive told Reuters in an interview on Wednesday.
His comments came a day after the cash-strapped Indian airline filed for bankruptcy, blaming "faulty" Pratt & Whitney (P&W) engines for the grounding of about half its fleet.
The insolvency proceedings were aimed at reviving the airline and not selling it, CEO Kaushik Khona said, confirming it had made all required payments to Pratt & Whitney.
The airline was also looking to dissuade lessors from taking action.
“The Indian government is very keen we should not fail,” Khona told Reuters.
The company, which is “continuously evaluating options”, said some parties have expressed interest in the airline. It did not share further details.
Go First’s lenders will most likely meet on Wednesday to discuss what to do next after the bankruptcy filing on Tuesday, two bankers aware of the development told Reuters.
The airline owed financial creditors 65.21 billion Indian rupees ($797 million), its bankruptcy filing showed. As of April 30, Go First had not defaulted on any of those loans, it said in the filing seen by Reuters.
BOON FOR RIVALS
Go First's bankruptcy may boost airfares in India and give other domestic airlines a chance to grab a larger chunk of the market share, analysts said.
Share prices of India's largest airline, IndiGo, were up 5.1% on Wednesday, after rising as much as 8.2% earlier.
"If the suspension is prolonged, other airlines that are adding capacity would look to avail the slots vacated by Go First and grab onto the market share," Jefferies analyst Prateek Kumar said in a client note.
"Indigo is facing a similar problem with P&W engines for some of its fleet but has been able to better maneuver the crisis owing to its much larger fleet size and better negotiations with the vendor," Kumar added.
Lessors may also be eager to allocate some Go First aircraft to IndiGo, given a similar fleet type, Credit Suisse analysts wrote in a note, adding that such a development would benefit IndiGo in terms of market share and stronger yields in a capacity-strained environment.
Lenders to Go First, including Central Bank of India, Bank of Baroda, IDBI Bank and Axis Bank, fell on Wednesday. Go First owes creditors 65.21 billion rupees ($798 million), its bankruptcy filing showed.
The Wadia Group also runs bread and biscuits maker Britannia Industries and textile firm Bombay Dyeing and Manufacturing Co. Share prices of Bombay Burmah Trading, which is also owned by Wadia and has given loans to Go First in the form of inter-corporate deposits, slid 5%.
($1 = 81.8450 Indian rupees)
