SpiceJet confirms bid for Go First; stock surges 29% in two days

Shares of SpiceJet continued its sharp upward move for the second straight session on Tuesday, with the share price of the low-cost carrier zooming over 29% in two days after the airline expressed interest in buying the bankrupt carrier Go First. The Gurgaon-based budget carrier today confirmed that it will submit an offer to buy a stake in Go First after conducting due diligence on the grounded airline, to create a strong and viable airline in a possible combination with SpiceJet.

“SpiceJet has expressed interest with the Resolution Professional of Go First and wish to submit an offer post diligence, with a view to creating a strong and viable airline in a possible combination with SpiceJet,” the airline says in a BSE filing today.

On Tuesday, SpiceJet shares opened up 2.8% at ₹66 on the BSE, after ending 19.8% higher at ₹64.21 apiece in the previous session. In the first two hours of trade so far, the aviation stock gained as much as 7.7% to hit a fresh 52-week high of ₹69.20, while the market capitalisation rose to ₹4,580 crore.  

As per a report, two other entities - Sharjah-based Sky One company and Africa-focused Safrik Investments - have also expressed interest in buying the beleaguered carrier Go First. These three parties have requested the resolution professional managing Go First’s corporate insolvency resolution process (CIRP) to conduct due diligence and extend the deadline for submitting proposals. The committee of creditors will soon meet to take a call on whether an extension can be granted.

Wadia group-owned Go Air, now re-branded as Go First, has been grounded since May this year and slide into bankruptcy due to financial woes. The Wadias had entered the aviation market by incorporating Go Airlines in 2004 and began the services under the brand name, Go Air, in 2005. Later in 2021, the Nusli Wadia-owned airline rebranded itself from ‘Go Air’ to ‘Go First’. As of March 2023, the airline’s debt stood at ₹3,513 crore, while its cumulative losses rose to ₹4,543 crore in the past four years.

SpiceJet to raise $270 mn

SpiceJet also informed the exchanges that its board has recently approved and initiated process of raising fresh capital of about $270 million to strengthen its financial position and provide resources to invest in growth plans.

On December 12, 2023, the board of SpiceJet gave nod to a proposal to raise ₹2,250 crore ($270 million) by selling shares and warrants to help revive its grounded planes and improve its financial health. The cash-strapped company has grounded 25 fleets as it struggles to repay its lessors, former owner Kalanidhi Maran, and others.

In September this year, SpiceJet, facing the double whammy of financial distress and legal struggle, completed its payment of $1.5 million to the global investment bank and financial services firm Credit Suisse as per the directive issued by the Supreme Court of India. The company also made a payment worth ₹77.5 crore and ₹100 crore, respectively, to its former promoter Kalanithi Maran’s Kal Airways Private Ltd during the month.

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