The budget carrier will use the money to keep operations smooth and running.
India’s budget carrier Go First is set to receive another cash infusion, this time raised through its owners, the Indian conglomerate Wadia Group. This is on top of previous capital infusion and government loans in the last 15 months, to keep its operations smooth during COVID and other global challenges.
More capital
Go First will receive ₹5.1 billion ($61.5 million) from its owners Wadia Group. According to a report by Business Standard, the Indian conglomerate will raise the money through its Mauritius-based entity Baymanco Investments.
The report says that the airline will “raise funds by way of 0.01 percent compulsory convertible preference shares (CCPS) of the company of face value of Rs 10 each, aggregating to Rs 510 crore on a preferential basis through private placement, through two separate issuances and allotments.”
Company documents reviewed by Business Standard also reveal that Baymanco Investments will receive these CCPS within a year. After the allocation, the CCPS will then be converted into equity shares after five years.
The documents also stated that the money raised through this method will be used “towards working capital requirements and general corporate purposes.”
Previous loans
Last month, Go First secured a loan of ₹4 billion (around $49 million) as part of the Indian government’s Emergency Credit Line Guarantee Scheme (ECLGS). In October, the government decided to increase the credit limit for the aviation sector under this special scheme that was announced during the COVID pandemic.
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Sources had earlier revealed that the airline has received close to a ₹28 billion ($342 million) cash infusion from its owners in the last 15 months to keep operations running during the pandemic and travel curbs.
Losses
Go First reported a net loss of around $218 million in the financial year 2022, according to its regulatory filings. This was twice as much as last year when it reported a net loss of around $105 million.
The airline has blamed successive COVID waves as well as its grounded fleet as prime reasons for losing money. But Go First’s revenue went up by 92.64% from $263 million to $506 million in the same period. It also stated that as the infections went down and passengers returned, its load factor saw a marked improvement, reaching almost 80% in March 2022.
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Go First has also been affected by a surge in flight delays and cancelations lately. Many of its aircraft are grounded due to a lack of engines and spares affected by global supply chain issues. But things are improving gradually, with engine maker Pratt & Whitney looking to supply around 20-25 engines every month starting in December and planning to finally clear the backlog of its engine deliveries to Indian airlines in the next three months.
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Source: Business Standard