Ajay Singh, the CMD of SpiceJet, in collaboration with Busy Bee Airways, have jointly submitted their bid for acquisition of GoFirst airline, as announced by SpiceJet on Friday. Sky One, led by Jaideep Mirchandani, has also submitted a bid for GoFirst.
In a release on Friday, SpiceJet said the bid has been submitted by Singh in his personal capacity along with Busy Bee Airways Pvt Ltd. The release said, "SpiceJet's role as the operating partner for the new airline involves providing essential staff, services, and industry expertise.
Ajay Singh in the release said: "I firmly believe that GoFirst holds immense potential and can be revitalised to work in close synergy with SpiceJet, benefiting both carriers, leading to improved cost management, revenue growth, and a strengthened market position within the Indian aviation industry,"
The airline said "For SpiceJet, serving as the service provider presents significant opportunities for revenue expansion. SpiceJet can optimise resource allocation and achieve cost efficiencies across various functions, including maintenance, ground handling, and engineering.”
"GoFirst is a trusted and valued brand among flyers," stated Ajay Singh, "apart from coveted slots at domestic and international airports, international traffic rights, and an order for over 100 Airbus Neo planes." It gives me great pleasure to support the efforts intended at revitalising this well-known airline and utilizing its advantages for shared prosperity and development,” he said.
Ajay Singh previously made a bid for Air India during the government's divestment efforts, but the airline ultimately returned to its founder, the Tata Group.
Crisis Hit SpiceJet
SpiceJet has been grappling with a cash shortage for more than two years, leading to delays in payments to various stakeholders, including employee salaries, provident fund contributions, and tax deductions. To mitigate costs, the airline is downsizing its workforce by 15%.
With additional subscriptions awaiting regulatory permission, SpiceJet has completed its first tranche of capital injection, totaling ₹744 crore, as part of its current recovery strategy.
The company has commenced the process of raising an additional ₹1000 crore. SpiceJet has already obtained valid shareholder approval to raise up to ₹2,500 crore through QIP, thereby eliminating the necessity for additional shareholder approval.
Following the bid announcement on Friday, SpiceJet shares saw considerable buying interest during Friday's trading session. The stock opened higher today, reaching an intraday high of ₹71.90 each, reflecting a significant 13% increase from Thursday's closing price of ₹63.63 on the National Stock Exchange.
Second Bid for Go First by Sky One Airways
Sky One Airways, an aviation firm located in Sharjah, has put in a second proposal for the Go First. "We have submitted the Go First bid and look forward to the next stage - which is due diligence," stated Sky One Chairman Jaideep Mirchandani.
"Given our vast aviation experience across the globe, we are confident about the acquisition. Indian aviation is at the cusp of unprecedented growth and we are glad to play a part in it," Mirchandani stated.
GoFirst Bankruptcy
GoFirst ceased operations on May 3, 2023, primarily due to financial challenges triggered by Pratt & Whitney engine problems, and is now undergoing insolvency resolution.
Since filing for bankruptcy in May last year, GoFirst owes a total debt of ₹6,521 crore to various creditors, including Central Bank of India, Bank of Baroda, IDBI Bank, and Deutsche Bank.
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