SpiceJet to raise Rs 2,241 crore in two tranches to acquire Go First: Report

Cash-strapped SpiceJet Ltd, which expressed its interest in acquiring bankrupt airline Go First, has reportedly said that it will raise a total of Rs 2,241 crore in two tranches for the deal. A report on CNBC TV-18 said that the low-cost carrier is planning to raise Rs 1,591 crore in the first tranche, which is expected to be done by June 2024. In the second tranche, the airline will raise Rs 650 crore and is expected to complete it by June 2025.

On Tuesday, in an exchange notification, the airline said it has, “expressed interest with the Resolution Professional of Go First and wish(es) to submit an offer post diligence, with a view to creating a strong and viable airline in a possible combination with SpiceJet."

In May this year, Go First submitted its voluntary bankruptcy with the National Company Law Tribunal and has remained grounded since then. The airline has a fleet of 54 Airbus SE A320neos. The low-cost carrier has filed for voluntary bankruptcy proceedings amid financial woes, mainly triggered by Pratt & Whitney engine issues.

According to its insolvency filings, Go First owes at least Rs 11,463 crore to banks, international lessors and vendors. Of this, banks, such as Central Bank of India, Bank of Baroda, IDBI Bank and Deutsche Bank, have dues worth Rs 6,521 crore.

On the other hand, SpiceJet, which was also dragged to the NCLT by multiple lessors for pending dues, has recently announced that its Board approved the raising of fresh capital of over Rs 2,250 crore through the issuance of equity shares to financial institutions, FIIs, HNIs and private investors.

Earlier this month, the budget carrier reported that its consolidated net loss for the quarter ended September 2023 narrowed to Rs 449 crore, compared with Rs 830 crore in the year-ago period. The company had posted a profit of Rs 198 crore in the preceding June quarter.

Consolidated revenue from operations fell 27 per cent year-on-year to Rs 1,429 crore.

During Q2, the passenger RASK increased by 11 per cent due to increase in yield by 8 per cent and load factor by 3 per cent. The airline has launched 13 new routes during the quarter.

CMD Ajay Singh said: "The July-September quarter has historically been a challenging period for the aviation industry. This year, the challenges were further compounded by elevated fuel prices, impacting operational costs. SpiceJet has been proactive in implementing cost-saving measures and remains focused on adapting to the dynamic market conditions."

Earlier, Ajay Singh-led SpiceJet consortium had bid for Air India, which did not materialise. Tata Group that took control of Air India in January 2022.

Also watch: Can SpiceJet's Bid Rescue Go First Airways?

Also read: Centre planning to bring in two-month asset freeze rule for bankrupt airlines: Report