BENGALURU, May 3 (Reuters) – Go Airlines (India) Ltd owner Wadia Group is fully committed to the airline and has no plans to exit, the airline’s chief executive told Reuters in an interview on Wednesday.
His comments came a day after cash-strapped Indian Airlines filed for bankruptcy after “faulty” Pratt & Whitney (B&W) engines grounded half of its planes.
CEO Kaushik Kona said the bankruptcy proceedings were aimed at reviving the airline and not selling it, ensuring that Pratt & Whitney made all required payments.
The airline also tried to prevent the tenants from taking action.
“The Indian government is very keen that we don’t fail,” Kona told Reuters.
The company is “continuing to evaluate options,” and some parties have expressed interest in the airline. It did not share further details.
Go First’s creditors will likely meet on Wednesday to discuss what to do next after the bankruptcy filing on Tuesday, two bankers familiar with the development told Reuters.
The airline owes financial creditors 65.21 billion Indian rupees ($797 million), its bankruptcy filing shows. As of April 30, GoFirst had not repaid any of those loans, it said in a filing seen by Reuters.
A boon to the contestants
Go First’s bankruptcy could push up airfares in India and give other domestic airlines a chance to grab a bigger chunk of the market share, analysts said.
Share prices of India’s largest airline IndiGo ( INGL.NS ) rose 5.1% on Wednesday, after rising 8.2% earlier.
“If the suspension persists, other airlines adding capacity will try to use the seats vacated by Go First to gain 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 fleets, but has managed to handle the crisis better due to its huge fleet size and better negotiations with the vendor,” Kumar added.
Lessors may be interested in allocating some Go First aircraft to IndiGo, given a similar fleet type, Credit Suisse analysts wrote in a note, adding that such growth would benefit IndiGo in terms of market share and strong yields in a capacity-constrained environment. .
Lenders including Central Bank of India ( CBI.NS ), Bank of Baroda ( POB.NS ), IDBI Bank ( IDBI.NS ) and Axis Bank ( AXPK.NS ) fell on Wednesday. Go First owes creditors 65.21 billion rupees ($798 million), its bankruptcy filing shows.
The Wadia group also runs bread and biscuit maker Britannia Industries ( BRIT.NS ) and textile giant Bombay Dyeing and Manufacturing Co ( BDYN.NS ). Share prices of Wadia-owned Bombay Burma Trading ( BBRM.NS ), which has made loans to Go First as an intercompany deposit, fell 5%.
($1 = 81.8450 INR)
Chris Thomas reports in Bangalore; Editing by Tanya Ann Thobill
Our Standards: Thomson Reuters Trust Principles.