Go First bankruptcy seen helping rivals, boosting airfares (updated)

Bombay Burmah Trading,

03/05/2023 06:32

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       BENGALURU, May 3 (Reuters) - Go First's bankruptcy will
likely boost airfares in India and give other domestic airlines
a chance to grab a larger chunk of the market share, analysts
said on Wednesday.
    Shares of India's largest airline IndiGo  INGL.NS  rose by
more than 8% on Wednesday, a day after cash-strapped airline Go
First filed for bankruptcy, blaming "faulty" Pratt & Whitney
(P&W) engines for the grounding of about half its fleet.
    "If the suspension is prolonged, other airlines that are
adding capacity would look to avail the slots vacated by Go
First and grab on to the market share," Jefferies analyst
Prateek Kumar said in a client note.
    "Indigo is facing a similar problem with P&W engines for
some of its fleet but has been able to better maneuver the
crisis owing to its much larger fleet size and better
negotiations with the vendor," Kumar added.
    Lessors may also be keen to allocate some of the Go First
aircraft to IndiGo, within India itself, given a similar fleet
type, Credit Suisse analysts wrote in a note, adding that the
development would benefit IndiGo in terms of market share and
stronger yields in a capacity strained environment.
    Lenders to Go First, including Central Bank of India
 CBI.NS , Bank of Baroda  BOB.NS , IDBI Bank  IDBI.NS  and Axis
Bank  AXBK.NS  dropped 1.1% to 6.8% on Wednesday. Go First owes
financial creditors 65.21 billion rupees ($798 million), its
bankruptcy filing showed.
    The airline is owned by the Wadia Group, which also runs
bread and biscuits maker Britannia Industries  BRIT.NS  and
textile firm Bombay Dyeing and Manufacturing Co  BDYN.NS , whose
shares dropped up to 1.5% and 5%, respectively.
    Bombay Burmah Trading  BBRM.NS , which is also owned by
Wadia and has given loans to Go First in the form of
inter-corporate deposits, slid 10%.

 (Reporting by Chris Thomas and Dhanya Skariachan in Bengaluru;
Editing by Dhanya Ann Thoppil and Savio D'Souza)
 ((chris.thomas@thomsonreuters.com; +91 80 6210 0487;))