New Delhi, October 13, 2023 : After announcing to the world that it would continue to steer Go First, the airline it set up in 2005, the Wadia group appears to have quietly deplaned. The erstwhile promoter of the airline has chosen to sit out of the bidding process, which kickstarted in July and was later expanded to September 28.
So far, two entities – Naveen Jindal-led Jindal Power and Jettwings Airways, the country’s first airline based in the North-East, have put in expressions of interest (EoIs) – the first step towards making financial bids for Go First.
A banker involved in the insolvency process confirmed that the Wadia group has not submitted an EoI so far. “While the law does not prohibit the Wadia Group from joining the process at a later stage, there was no current indication it would do so, which means that they are not interested in the airline,” a senior official of a public sector bank said.
The Go First bankruptcy filing lists Central Bank of India, Bank of Baroda, IDBI Bank and Deutsche Bank among its creditors.
This is a volte-face from the company’s stance in May when Go First’s CEO Kaushik Khona stated that the airline’s promoters are committed and have no plans to exit the company.
Since there hasn’t been any default by the airline to banks, to which it owes Rs 6,521 crore, the Wadia group was technically allowed to bid for the airline.
A loss of Rs 1,808 crore for FY22 (Rs 870-crore loss in FY21) alone pushed the accumulated losses to Rs 4,400 crore, Go First had a negative net worth of Rs 3,300 crore at the end of that year.
In comparison, the group’s four listed companies – Britannia Industries, Bombay Dyeing, Bombay Burmah Trading and National Peroxide – posted a combined net profit of Rs 1,300 crore. The loss at Go First pulled the group into the red to the tune of nearly Rs 500 crore.
It is this growing drag on the financials that forced the Wadias to halt fund infusion in the airline and seek help under the Insolvency and Bankruptcy Code. The airline filed for bankruptcy in May, blaming “faulty” Pratt & Whitney engines for the grounding of about half its fleet.
The Wadias claimed to have injected Rs 6,500 crore into the embattled airline since inception, including Rs 3,200 crore in the last three years.
Messages sent to Khona and to the communication team of the Wadia group seeking clarification on their stand remained unanswered at the time of going to press.
“More players in the fray would have led to higher bidding and higher recovery for the lenders. Their (Wadia’s) absence also sends a wrong signal to Go First employees,” the banker added.according to the reports published in www.financialexpress.com .
Go First has received over Rs 20,000 crore in claims from operational and financial creditors. The airline is also battling several court cases filed by its lessors who are keen to repossess the aircraft leased to it.
