ExplainedWhy IndiGo shares surged sharply today

By Koustav DasShares of budget carrier IndiGo’s parent company Interglobe Aviation Limited surged sharply on Wednesday.

The company, which operates India’s largest airline in terms of market share, saw its shares jump over 8 per cent in early trade. At around 10:12 am, shares of Interglobe Aviation were trading 6.18 per cent higher at Rs 2,195.15.

This comes after smaller rival Go First filed for bankruptcy on Tuesday after facing a severe fund crunch, for which it blamed engine maker Pratt and Whitney. Go First’s bankruptcy and curtailed operations will benefit IndiGo as it will get a larger share of the aviation market in India.

It may be noted that lessors may also be keen to allocate some of Go First aircraft to IndiGo, according to Credit Suisse analysts. They added that the development would benefit IndiGo in terms of market share and stronger yields in a capacity-strained environment.

Also Read | Aviation regulator DGCA issues show cause notice to Go First airline

Lenders to Go First, including Central Bank of India, Bank of Baroda, IDBI, and Axis Bank, saw their shares fall in early trade as the insolvency filing came as a surprise to them. Go First owns its creditors a total of Rs 6,521 crore, as per its bankruptcy filing.

Another airline, Spicejet, which is also struggling with its own set of financial difficulties, also saw its shares gain as a result of Go First’s bankruptcy filing.

Meanwhile, the Wadia Group, which owns Go First, saw shares of its other businesses such as Britannia Industries, Bombay Dyeing and Bombay Burmah fall sharply.

Also Read | Go First bankruptcyScindia says ‘prudent to wait for judicial process to run its course’