Go First, the Wadia group-promoted low-cost airline, is facing its toughest challenge at a time when it peers are readying to flex their muscles to make the most of the surge in demand for air travel. The reasons: funds crunch, dwindling market share and worsening flight punctuality.

While the Pratt & Whitney (P&W) engines are creating operational problems, financial woes are bleeding the airline. Last financial year, Go First recorded its biggest-ever loss at Rs 1,808 crore on a revenue of Rs 4,184 crore – the lowest since 2018. The company has a negative net worth of Rs 3,222 crore, as per disclosures made by it for FY22.

Also read: Explainer: India’s public stockholding dispute

Formerly known as GoAir, the Mumbai-based 17-year-old carrier is struggling to stay afloat with mounting losses and half of its fleet being grounded for want of replacement engines from supplier P&W.

While claiming to have one of the youngest fleets in the world with an average age of under 4.5 years, Go First’s aircraft inventory comprising Airbus A320neo has been hit repeatedly by engine issues.

In early January, when the company had an operational fleet of 33 aircraft, it had claimed to have received 17 engines from P&W for putting the grounded planes back in the air.

While it declined to outline the number of aircraft expected to become operational again, roughly 7-8 aircraft were expected to rejoin the operational fleet. But instead of fleet increment, the airline’s fleet strength has dropped to 31.

Its CEO Kaushik Khona had told PTI in January end that the airline aims to have 53 operational aircraft in its fleet by the start of April after getting Rs 210 crore under the government’s emergency credit line guarantee scheme (ECLGS).

The depleted fleet size has had an impact on its market share too. Its average market share in January and February stood at 8.2%, the lowest in seven years. From 260 flights a day in 2019, Goa First’s tally dropped to 200 flights per day in January and February, as per data sourced from the Directorate General of Civil Aviation (DGCA).

The company had plans to increase the daily departures to 400 by the start of April with the rejoining of the grounded fleet.

A questionnaire sent to Go First remained unanswered at the time of going to press.

However, a source said: “There is no cash crunch at Go First. The promoters have consistently infused money from time to time and are committed to the business. The promoters would be infusing a further Rs 300 crore equity in the business shortly and another Rs 300 crore would come in under the ECLGS.”

In the last 18 months, the promoters have already infused Rs 3,000 crore, the source added.

Independent aviation analyst Ameya Joshi said: “Go First has faced many issues which are both internal and external. The airline wasn’t in the best of financial health leading up to the pandemic.

The engine issues are beyond the control of the airline and have put further strain on its finances.”

With aggressive expansion plans shared by Tata Group-run Air India and market leader IndiGo, the Indian aviation market is set to witness heightened competition in the low cost carrier space leaving smaller carriers who have been unable to raise fresh funds, struggle for survival, according to experts.

Also read: Hot, dry weather plays havoc with Darjeeling first flush tea

In mid-December, Go First conducted an extraordinary general meeting (EGM) for considering a special resolution which proposes to raise Rs 510 crore by way of issue of preference shares through private placement. The proceeds from the issuance were proposed to be used for meeting working capital needs and general corporate purposes.

The promoter shareholding in the company will fall to under 43% (from 56.23%) after the issue, while that of foreign investors, which belong to the promoter group, will rise to 46% (from 29.24%).

With inputs from Rajesh Kurup in Mumbai