Bankrupt Airline GoFirst Announces Acquisition of SpiceJet: Aiming to Forge a Robust Airline, Shares Surge to One-Year High
SpiceJet Seeks to Take Over GoFirst Airlines
SpiceJet has confirmed its interest in acquiring GoFirst Airlines, as reported in the filing with the Bombay Stock Exchange (BSE) on December 19. Following this news, SpiceJet’s shares strengthened by more than 5%, reaching a one-year high of INR 69.20.
The company believes that the consolidation of GoFirst and SpiceJet would create a robust airline. SpiceJet recently received approval from its board to raise INR 2,254 crores through a rights issue. This move is expected to bring together financial institutions, FII, HNI, and private investors to participate in the share issuance and contribute to the consolidation.
The aviation industry is closely watching these developments, anticipating potential synergies and changes in the competitive landscape. The successful merger could result in a more formidable entity, better positioned to navigate the challenges in the aviation sector and provide enhanced services to passengers.
Three Companies Express Interest in Acquiring GoFirst Airlines
In a recent development, it was revealed that three prominent companies, SpiceJet, South Africa’s Safair Investments, and Sharjah-based Aviation company Sky Van, have shown interest in acquiring GoFirst Airlines.
The bidding process for acquiring GoFirst initiated on November 22, 2023, and until now, none of the companies had officially expressed their intention to acquire the airline. The expectation is that with these expressions of interest, the bidding date may be extended.
GoFirst has offered its stakeholders a deal worth INR 6,521 crores. Moody’s Investors Service reported on January 19 that the Central Bank of India has the highest exposure of INR 1,987 crores to GoFirst, followed by Bank of Baroda at INR 1,430 crores, Deutsche Bank at INR 1,320 crores, and IDBI Bank at INR 58 crores.
The airline has been facing financial challenges, and its flights have been grounded since May 3, affecting all its operations. The date for resuming GoFirst flights remains uncertain.
This news brings anticipation to the aviation sector as industry watchers observe the developments in the bidding process and speculate on the potential impact of the acquisition on the competitive landscape.
GoFirst Airlines Forced to Halt Operations Due to Engine Supply Shortage
GoFirst Airlines claims that the suspension of its operations is a result of the unavailability of aircraft engines, forcing the airline to cease its operations. The airline was supplied with engines by American aircraft engine manufacturer Pratt & Whitney (PW), but timely supply was not fulfilled. Consequently, GoFirst had to ground more aircraft, incurring substantial losses.
The situation led to significant financial setbacks for GoFirst, with a major portion of its fleet grounded. The lack of flight operations impacted revenue streams and incurred additional costs for fueling aircraft that were idle. The affected engines were utilized in the airline’s A20 Neo aircraft.
CEO Koushik Khona stated that the company suffered a loss of approximately 1.1 billion dollars, roughly around INR 8.9 thousand crores, in the last three years due to engine malfunctions. The financial strain, coupled with operational challenges, has compelled GoFirst to halt its flight services temporarily.
GoFirst Airlines: A Journey from Inception to Expansion
GoFirst, a budget airline under the wings of the Wadia Group, took its maiden flight from Mumbai to Ahmedabad in November 2005, marking the beginning of its operational journey. Launched on April 29, 2004, according to the company’s website, the airline swiftly expanded its services to cover both domestic and international destinations.
With a fleet comprising 59 aircraft, GoFirst boasts 54 A320 NEO and 5 A320 CEO aircraft. The airline operates flights to 35 destinations, including 27 domestic and 8 international locations. Over the years, GoFirst has solidified its position as a key player in the aviation industry, connecting people across various regions.
Originally known as GoAir, the airline underwent a rebranding in 2021, adopting the name GoFirst. This shift aligns with the company’s continuous efforts to evolve and offer reliable air travel services to its passengers. As GoFirst continues to grow, it remains a prominent player in the competitive airline industry.
