IndiGo, SpiceJet & Jet Airways shares jump up to 8% after Go First files for insolvency

Shares of Aviation stocks were on a roll in Wednesday's trade as they surged up to 8 per cent after Wadia Group-owned Go First filed for bankruptcy on Tuesday, May 2. This means lower competition for peers. As of April 30, Go First Air had not defaulted on any of these dues, it said in the filing, reported news agency Reuters.

On the back of this announcement, Shares of InterGlobe Aviation (IndiGo), Jet Airways and SpiceJet rallied up to 8 per cent during the early trading session on Wednesday. Also, a sharp fall in the crude oil prices in the international markets supported the aviation counters.

Shares of InterGlobe Aviation rallied 8 per cent to Rs 2,235.95 on Wednesday, before trading at Rs 2,174.60 at 9.35 am. The scrip had settled at Rs 2,070.40 in the previous sessions. Similarly, Shares of SpiceJet surged about 6 per cent to Rs 33.25 against its close at Rs 31.49 in the previous session. Defunct airlines Jet Airways' shares also surged 5 per cent to Rs 60.59.

The Wadia Group airline said that it cannot continue to meet its financial obligations and blamed US company Pratt & Whitney's 'faulty engines' for grounding 50 per cent of its fleet. In the buzz, all flights of Go First were suspended for May 3-5.

The low-cost carrier has filed an application for voluntary insolvency resolution proceedings before the National Company Law Tribunal (NCLT), said CEO Kaushik Khona. Aviation regulator DGCA has also issued a show cause notice to the airline after Go First decided to cancel flights for three days.

Prior to this, Go First was looking to raise about Rs 3,600 crore via its initial public offering (IPO), which was deferred once again amid the weak sentiments and reluctance of owners to infuse funds into the loss-making company. Go First's Draft Red Herring Prospectus has expired in August 2022 and the company has been eyeing a listing since 2015.

The airline had received approval from the market regulator for its IPO but had held back the share sale plan first in August 2021 after SEBI called the promoters, the Wadias, for a pending inquiry, and then in December 2021, Go First further delayed the offering due to the outbreak of the Omicron wave.