Go First owner has no plans to leave airline: CEO

BENGALURU, May 3 (Reuters) – Go Airlines (India) Ltd owner Wadia Group is fully committed to the airline and had no plans to leave 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 “defective”[ads1]; Pratt & Whitney (P&W) engines for the grounding of about half its fleet.

The bankruptcy proceedings were aimed at reviving the airline and not selling it, CEO Kaushik Khona said, confirming that it had made all necessary payments to Pratt & Whitney.

The airline was also looking to dissuade tenants from taking action.

“The Indian government is very keen that we not fail,” Khona told Reuters.

The company, which is “continually evaluating options”, said some parties have expressed interest in the airline. It did not share further details.

Go First’s lenders are likely to meet on Wednesday to discuss what to do next after the bankruptcy filing on Tuesday, two bankers with knowledge of the development told Reuters.

The airline owed financial creditors 65.21 billion Indian rupees ($797 million), the bankruptcy filing showed. As of April 30, Go First had not defaulted on any of these loans, according to the filing seen by Reuters.

BONUS FOR RIVALS

Go First’s bankruptcy could boost airfares in India and give other domestic airlines a chance to grab a bigger chunk of market share, analysts said.

Share prices 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 extended, other airlines increasing capacity will look to use the seats vacated by Go First and take market share,” Jefferies analyst Prateek Kumar said in a client note.

“Indigo is facing a similar issue with P&W engines for some of its fleet but has been able to maneuver the crisis better due to its much larger fleet size and better negotiations with the supplier,” Kumar added.

Landlords may also be keen 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 returns in a capacity-driven environment.

Lenders to Go First, including Central Bank of India ( CBI.NS ), Bank of Baroda ( BOB.NS ), IDBI Bank ( IDBI.NS ) and Axis Bank ( AXBK.NS ), fell on Wednesday. Go First owes creditors 65.21 billion rupees ($798 million), the bankruptcy filing showed.

The Wadia Group also operates bread and biscuit maker Britannia Industries ( BRIT.NS ) and textile firm Bombay Dyeing and Manufacturing Co ( BDYN.NS ). Share prices in Bombay Burmah Trading ( BBRM.NS ), which is also owned by Wadia and has provided loans to Go First in the form of intercompany deposits, fell 5%.

($1 = 81.8450 Indian Rupees)

Reporting by Chris Thomas in Bengaluru; Editing by Dhanya Ann Thoppil

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