Wadia group likely to exit loss-making budget carrier Go First: Report

Wadia group has begun talks to either sell a significant stake in or completely exit the budget carrier Go First, a report by The Economic Times (ET) said. The airline reported its highest annual financial loss in 2021-22 and has been facing operational issues.

In the past few months, Go First's over half aircraft have been grounded due to supply chain disruptions due to Pratt & Whitney (P&W) engines.

In an otherwise upbeat domestic aviation market, Go First has lost a significant amount of money lately. Initially, it availed of Rs 600 crore under the Centre's Emergency Credit Line Guarantee Scheme (ECLGS). Separately, Wadia Group infused Rs 3,000 crore over the past 15 months in the airline.

"It is a difficult situation that is being tackled. We are burning money with our aircraft on the ground. We have spent Rs 3,000 crore in the last 15 months to keep the airline afloat...All options are being considered, and multiple scenarios have been planned. The last option, unfortunately, will be to exit the airline business," an official aware of the matter was quoted as saying in the report.

The airline's net worth, according to Capitaline, has fallen from (-) Rs 2,361 crore to (-) Rs 3,317. During the same period, its losses widened from Rs 870 crore to Rs 1,804 crore.

The airline was also planning to launch its initial public offer (IPO) earlier in 2021 but it got delayed due to the Covid-19 pandemic. Go First filed the draft red herring prospectus (DRHP) in May 2021 to raise Rs 3,600 crore. It received the regulator's nod in August 2021. However, the approval expired on August 26, 2022.

Using the IPO proceeds, the airline was planning to repay Rs 2,015 crore worth of debt.