India’s SpiceJet Confirms Bid to Acquire Bankrupt Carrier GoFirst
Skift Take
Indian low-cost carrier SpiceJet on Tuesday officially confirmed its intent to bid for Go First, which filed for bankruptcy in May this year.
The airline expressed its interest in an exchange filing, stating that it has approached the Resolution Professional of Go First and intends to submit an offer after conducting due diligence. The goal is to “create a strong and viable airline in a possible combination with SpiceJet.”
However, SpiceJet itself has faced financial challenges and a surge in flight disruptions this year. The airline’s fleet currently consists of 34 active aircraft, 23 inactive aircraft, and 10 wet-leased aircraft, a significant reduction from its earlier fleet size of over 90 aircraft. The airline’s local market share has also declined from 7.3% in the fourth quarter of 2022 to 5.4% at present.
SpiceJet has encountered legal challenges from creditors, lessors, and its former majority owner, Kalanithi Maran, amid substantial debt and liabilities. In November, the airline’s legal representative informed the Delhi High Court that SpiceJet was “struggling to stay afloat.”
In its September quarter result, the airline reported a net loss of INR 428 crore ($50 million), nearly half of the INR 835 crore ($100 million) losses recorded the previous year.
To strengthen its financial position and support growth plans, the SpiceJet board last week approved the initiation of a capital-raising process, aiming to secure about INR 22.5 billion ($270 million).
The proposed fund infusion will go a long way in enhancing product presence and market reach of SpiceJet and will also provide deep financial foundation, the carrier said in an exchange filing.
“This is a significant fund raise and it is designed to strengthen SpiceJet’s financial position, enhance operational capabilities, settle outstanding issues and position the airline again for sustained growth,” said Ajay Singh, chairman and managing director of SpiceJet.
Singh also emphasized that the capital raise would assist the airline in overcoming “a difficult phase” in its history.
Last year, reports had suggested that Singh, a majority owner of the carrier with 60% stake, was in talks with a Middle Eastern carrier and an Indian conglomerate to partially sell a portion of his stake in SpiceJet.
Meanwhile, Go First, facing debts exceeding INR 6,200 crore ($745 million), has garnered interest from other potential buyers, including Sharjah-based aviation company Sky One and Africa-focused Safrik Investments.