Wadia group promoters Nusli Wadia and son Jeh said there have been no signs of help from the Centre and banks to bail out the aviation sector. The Wadia group owns low-cost airline GoAir, which has sent 90 per cent of its employees on leave without pay till May 4.
The group stated this in a letter to the airlines’ employees on May 3. In the past, the Wadias had pledged shares worth Rs 80 crore, held by a group company, to raise debt for GoAir. It has also provided a corporate guarantee of Rs 500 crore for working capital limits raised by the airline.
“We have been in touch with the government requesting for both structural changes and financial assistance but nothing has been forthcoming. Likewise, we have been requesting the banks but they haven’t also reached a conclusion on how to support the airlines,” the Wadias noted in the letter.
The airline hasn’t yet paid salaries of March except to the lower ranks. They also drew comparison with other western economies which have provided financial assistance to their airlines for payment of salary and restructuring their operations. “These airlines have got substantial help and financial assistance from their government and banking system,” the letter stated.
India’s airlines and airports, the most impacted by outbreak of the virus, has been seeking help from the government to mitigate the financial impact of the epidemic.
The aviation industry needs an urgent bailout from the government, industry body FICCI’s aviation committee chairman Anand Stanley wrote to the government.
Stanley is also head of Airbus in India.
“The government may immediately provide direct cash support to Indian carriers so that airlines can meet their fixed costs, at least for the period where loss of revenues and liquidity is directly attributable to the government’s directive to cease operations,” said Stanley.
To gauge the impact of the crisis, paassenger numbers for Indian airlines fell by 33 per cent in March, which had just six days of closure, as compared to the corresponding period last year.
GoAir has mostly been profitable due to its slow growth approach and healthy revenue from sale and leaseback of aircraft. The airline plans to resume operations with 8-10 aircraft upon relaxation of lockdown. Pre-lockdown, it operated over 300 flights daily with 45 aircraft and could start with only around 50 flights to begin with.
“According to the airlines’ business plan, it would be March 2021 when it will resume full operations again. Hence, it doesn’t need as much crew,” said a person aware of the development. Network expansion will be gradual and initial stage staff requirements for operations would be less.