Go First’s Revival Chances Seem Slim As History, Bids Invoke Little Confidence

The fresh bids have raised eyebrows as to what value these bidders are seeing in an airline grounded for nearly 10 months, with a depleted fleet and its slots already being used by rivals.

<div class="paragraphs"><p>The Go First crew stands in front of the aircraft. (Source: Go First/X)</p></div>
The Go First crew stands in front of the aircraft. (Source: Go First/X)

The revival of Go First may still be a distant dream as latest bids for the grounded airline fail to infuse confidence in a market where grounded airlines seldom make comebacks.

But after its sole potential buyer, Jindal Power Ltd., decided not to bid, the cash-strapped airline has got two bids in the second round, sparking hope that it may fly once again.

Jindal reportedly pulled out due to inability to assess the bankrupt airline’s value, as there’s no clarity on how many planes it will have at the end of the process.

The Ministry of Corporate Affairs came out with an order in October exempting transactions related to aircraft and engines from mandatory moratorium under the Insolvency and Bankruptcy Code. However, it’s yet to be seen whether it can be applied retrospectively.

While Jindal couldn’t ascertain the value, SpiceJet Ltd.’s Chairman Ajay Singh and EaseMyTrip Chief Executive Officer Nishant Pitti’s Busy Bee Airways Pvt. have put in a joint bid for Go First. Sharjah-based Sky One is the second bidder for the grounded airline.

The fresh bids have raised eyebrows as to what value these bidders are seeing in an airline grounded for nearly 10 months, with a depleted fleet and its slots already being used by rivals in the winter schedule.

"It’s interesting that two bids have been received at this stage but not in the first round, and after almost 10 months since grounding,” Ashish Chhawchharia, who served as the Resolution Professional of Jet Airways Ltd., told NDTV Profit. “I think there may be pockets of value that are now visible in this case, but the grounded aircrafts and employee matters will pose several challenges.”

Ajay Singh’s bid was bound to make heads turn as his own budget carrier SpiceJet faces its own troubles.

Supreme Court Directs SpiceJet To Clear Credit Suisse Arrears By March 15

Where’s The Value?

SpiceJet will lay off 15% of its workforce to cut costs, as it aims to turn around the airline with the help of fresh funds raised from investors.

The revival plan comes at a crucial time for the airline as it juggles poor operational performance, beaten down financials and a flurry of litigations.

"It's interesting that Ajay Singh has the money to bid for Go First but not to put it in the struggling SpiceJet," Ajay Awtaney, founder and editor of aviation news platform LiveFromALounge, had said after news of Singh's bid for Go First.

According to a statement, Singh believes Go First holds immense potential and can be revitalised to work in close synergy with SpiceJet, which can provide essential staff, services and industry expertise to the budget carrier.

Media reports pegged the combined bid from Singh and Busy Bee at Rs 600 crore, with Wadia Group-owned land parcels as corporate guarantees and a $300-million arbitral award from Pratt & Whitney outlining the plan to pay back lenders.

The grounded airline owes nearly Rs 6,500 crore to banks, with a total of Rs 20,000 crore of claims from both operational and financial creditors.

But how long the resolution process takes will be key to the revival of the company and learnings from Jet Airways’ case should help in dealing with challenges quickly, Chhawchharia said.

What A Struggling SpiceJet Gains From Showing Interest In Grounded Go First

Garage Sale

“They waited for the things to get desperate, hanging around hoping for a garage sale,” said Mark Martin, founder and CEO at aviation consulting firm Martin Consulting.

Martin sees Go First’s 100-plus jets on order from Airbus as a key reason behind these bids.

According to rough estimates, the price for an Airbus Neo 320 has grown to $112 million from $48 million when the order was placed in 2016, he said.

The order did find mention in Singh’s statement announcing the bid for Go First.

"Apart from coveted slots at domestic and international airports, international traffic rights, and an order for over 100 Airbus Neo planes, Go First is a trusted and valued brand among flyers,” Singh had said in the statement last week.

With Jet Airways’ successful bidders still awaiting the nod to fly again, hope for revival seems slim for Go First. As things stand, a rescue will be etched into history, while liquidation of the airline may not surprise many.

SpiceJet Chairman Ajay Singh, Busy Bee Airways Submit Joint Bid For Go First