Air Costa suspends operations and summer bookings; looking for new investors

Air Costa, one of the youngest airliner to provide services in domestic sector, has suspended its operations, and has also stopped taking any future bookings for now. The startup is going through an acute cash crush and is looking for new investors to keep the startup floating. It was started by L P Bhaskara Rao in 2013, however, it is yet to report any profit. During FY16, the firm reported a loss of INR130 crore on revenue of INR327 crore and operating expenses of INR457 crore. Its two Embraer jets are also grounded after it defaulted on lease payments.

The company’s spokesman said that “We have extended the suspension till Thursday and we have blocked the entire summer schedule bookings. Until we announce the resumption the bookings will remain on hold”. The firm has been facing cash issues since January’17, and hasn’t also paid its 600 employees since then. On top of this, it has an order list of 50 Embraer aircrafts which it will start receiving one by one starting next year.

It has been a tough time for regional airlines with Air Mantra and Paramount Airways already shutting shop, and Air Peagasus also been grounded since last year.