Go Airlines India Ltd.’s chances of taking to the skies again are nosediving as senior management quit in November and staff have not been paid for six months.
Jindal Power Ltd., Go’s sole potential buyer under its insolvency resolution process, has decided not to bid.
Local media reported that Jindal was unable to assess Go’s asset value particularly the number of grounded planes, after the aviation regulator signaled the company’s aircraft should be returned to lessors.
Go has 54 Airbus SE A320neos currently in its stable.
Go’s creditors include Central Bank of India, Bank of Baroda and Deutsche Bank AG.
Grounded airlines can all-important landing and parking slots, staff, planes, licenses.
If it were revived, Go’s new owners would need to clear pending dues, apart from employee salaries, this would include travel agents, passengers, equipment suppliers among other, which is a massive undertaking.
Many experts therefore are of the opinion that the airline may not be able to be revived.
The country’s biggest two carriers, IndiGo and a rejuvenated Air India have cornered over 70 per cent of the market, and are expanding their fleets with record deals.
Perhaps the most high-profile airlines to go bust was billionaire Vijay Mallya-founded Kingfisher Airlines Ltd. in 2003 and Jet Airwaysm backed by Naresh Goyal in 2019.
Again, due to similar factors, it stopped flying in 2012, owing to mounting debts and allegations of fraud. The authorities are still trying to extradite Mallya from London to face charges of the alleged financial fraud.
Mallya’s lawyers have said the extradition requests ignored evidence and misunderstood the circumstances that led to Kingfisher’s collapse.
Jet Airways, once India’s second-biggest airline, then majority-owned by billionaire Naresh Goyal, has managed to get investors onboard to fulfill the financial requirements of a court-approved resolution plan, but the company is yet to restart operations.
Go was established in 2005 by the Wadia Group, headed by Nusli Wadia, the grandson of Mohammed Ali Jinnah, founder of Pakistan.
Wadia Group, which also runs Britannia Industries Ltd. and Bombay Dyeing and Manufacturing Co., took on high debts to expand market share, but as the pandemic grounded travel, the challenge of operating in India became even harder as passenger traffic declined and is still recovering, even with ‘revenge travel.’
Supply chain shortages exacerbated troubles for Go, as it did for many airlines that endured long waits for parts and replacement engines.
Ultimately, many experts feel Go failed to create a unique place for itself in a highly-competitive market where it battled other airlines, whether in efficiency or legacy brand value.
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