Budget airline SpiceJet, which itself has been grappling with financial difficulties, has expressed interest in acquiring bankrupt carrier Go First with a view to create a viable airline in “a possible combination with Spicejet”. In a regulatory filing, SpiceJet confirmed that it has expressed interest in acquiring Go First, which is currently undergoing the corporate insolvency resolution process (CIRP) after it decided to voluntarily file for insolvency in early May.
“Please note that SpiceJet Limited…has expressed interest with the Resolution Professional of Go First and wish to submit an offer post diligence, with a view to creating a strong and viable airline in a possible combination with SpiceJet,” SpiceJet said in a stock exchange filing on Tuesday.
Following SpiceJet’s filing, its shares jumped nearly 8 per cent from Monday’s closing level on the BSE to hit a 52-week high of Rs 69.20, before closing at Rs 66.08, nearly 3 per cent higher from the previous close.
“The Board of the Company has recently approved and initiated process of raising fresh capital of about US$ 270 million to strengthen its financial position and provide resources to invest in growth plans,” SpiceJet added. This suggests that the no-frills carrier could consider using part of the fresh capital it plans to raise to potentially acquire Go First.
Last week, SpiceJet announced that it will be raising fresh capital of Rs 2,250 crore through issuance of equity shares to financial institutions, foreign institutional investors (FIIs), high net worth individuals (HNIs), and private investors for “fortifying the airline’s financial strength and accelerating its growth trajectory”.
It is worth noting that SpiceJet itself has been struggling financially for some time now, and has been embroiled in legal tussles with creditors and aircraft lessors. All this has reportedly impacted operations and the airline has been forced to delay salaries on multiple occasions. Apart from the latest decision to raise fresh equity, the airline had converted over $100 million of lease rental dues into equity for aircraft lessor Carlyle Aviation.
According to sources, as the deadline for submitting the EoI has already lapsed, SpiceJet has requested Go First’s resolution professional Shailendra Ajmera to allow it to submit an EoI. According to reports, United Arab Emirates-based aviation company Sky One and Africa-focussed investment firm Safrik have also recently expressed interest in bidding for Go First. Earlier, while Jindal Power and Jettwings Airways had submitted expressions of interest (EoI) in acquiring Go First, they did not finally bid for the Wadia group airline by the November 22 deadline. Lenders have been contemplating liquidation of Go First as it failed to attract bids from potential investors.
Cash-strapped Go First announced on May 2 that it was filing for voluntary insolvency proceedings with the National Company Law Tribunal (NCLT), blaming engine manufacturer Pratt & Whitney (P&W) for the financial crisis. The airline said that it was “forced to apply to the NCLT” after “the ever-increasing number of failing engines supplied by Pratt & Whitney’s International Aero Engines” led to the grounding of 25 aircraft, or half its fleet of Airbus A320neo planes, and significant financial stress. Go First cancelled all its flights starting May 3 and has not resumed operations yet.
In its initial filing with the NCLT, Go First said that it owed Rs 6,521 crore to financial creditors, which include Central Bank of India, Bank of Baroda, IDBI Bank, and Deutsche Bank. While the carrier had not defaulted on its dues till April 30, it informed the NCLT that given its current financial position, defaults would be “imminent”. The carrier did, however, default on payments to operational creditors, including Rs 1,202 crore to vendors and Rs 2,660 crore to aircraft lessors.
© The Indian Express Pvt Ltd Sukalp Sharma 
Sukalp Sharma is a Senior Assistant Editor with The Indian Express and writes on a host of subjects and sectors, notably energy and aviation. He has over 13 years of experience in journalism with a body of work spanning areas like politics, development, equity markets, corporates, trade, and economic policy. Before joining The Indian Express, Sukalp had long and enriching stints at financial newswire Informist and the Express Group’s pink paper The Financial Express. He considers himself an above-average photographer, which goes well with his love for travel. … Read More