BENGALURU (Reuters) – Wadia Group, owner of Go Airlines (India) Ltd., is fully committed to the airline and has no plans to exit, the company’s chief executive told Reuters in an interview on Wednesday.
His comments came a day after the cash-strapped Indian airline declared bankruptcy, blaming “faulty” Pratt & Whitney (P&W) engines for shutting down about half of its fleet.
Chief Executive Officer Kaushik Khona said the bankruptcy proceedings were aimed at reviving the airline, not selling it, stressing that 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 that we do not fail,” Khona told Reuters.
The company, which is “constantly evaluating options,” said some parties have expressed interest in the airline. It did not disclose further details.
Two bankers with knowledge of the development told Reuters that Go First’s lenders will likely meet on Wednesday to discuss what to do after Tuesday’s bankruptcy declaration.
The bankruptcy filing showed that the company owed financial creditors 65.21 billion Indian rupees ($797 million). As of April 30, Go First had not defaulted on any of those loans, the company said in the filing, seen by Reuters.
Bonn for competitors
Analysts said that the bankruptcy of Go First could boost air fares in India and give other domestic airlines a chance to grab a bigger part of the market share.
Shares of India’s largest airline, IndiGo (INGL.NS), rose 5.1% on Wednesday, after rising as much as 8.2% earlier.
“If the suspension is prolonged, other airlines adding capacity will look to capitalize on the slots vacated by Go First and grab market share,” Jefferies analyst Pratik Kumar said in a note to a client.
Kumar added, “Indigo has a similar issue with P&W engines for some of its fleet but has managed to maneuver better in the crisis due to its much larger fleet size and better negotiations with the vendor.”
Lessors may also be keen to allocate some Go First aircraft to IndiGo, given the similar fleet type, Credit Suisse analysts wrote in a note, adding that such development would benefit IndiGo in terms of stronger market share and returns in a tense environment. .
Go First lenders, including the Central Bank of India (CBI.NS), Bank of Baroda (BOB.NS), IDBI Bank (IDBI.NS) and Axis Bank (AXBK.NS), tumbled on Wednesday. Its bankruptcy filing showed Go First owed creditors 65.21 billion rupees ($798 million).
The Wadia Group also operates the bread and biscuit maker Britannia Industries (BRIT.NS) and the textile company Bombay Dyeing and Manufacturing Co (BDYN.NS). Shares in Bombay Burma Trading Company (BBRM.NS), which is also owned by Wadia and has provided loans to Go First in the form of inter-company deposits, fell 5%.
($1 = 81.8450 Indian Rupees)
Additional reporting by Chris Thomas in Bengaluru; Editing by Dania Ann Thoppil
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