Lenders agree to clear INR 400 crore to bring Go First back on track; DGCA’s nod awaited
Go First’s lenders have agreed in principle to support the airline’s request for INR 400 crore interim funding to restart its operations.
The airline temporarily halted operations on May 2, and its insolvency plea was admitted by the National Company Law Tribunal (NCLT) on May 10. Last week, the airline’s resolution professional Shailendra Ajmera submitted a business plan and a request for over INR 400 crore funding to airline’s committee of creditors (CoC).
The CoC comprises Go First’s lenders — Bank of Baroda, Central Bank of India, Deutsche Bank, and IDBI Bank — which collectively have an exposure of over INR 6,500 crore to the airline. Bank representatives met again to discuss the airline’s funding request.
While the lenders have given an in-principle nod, the additional funding would require approval from respective bank boards. This will happen once the DGCA clears the plans.
The additional funds would be treated as interim finance, which has priority over all other debt under the insolvency process. “Lenders are trying for a unanimous decision, so that all lenders loan extra funds,” said a source.
Go First plans to operate around 150 daily flights with 22 aircraft. The airline also plans to operate charter flights for defence forces in the initial phase.
Ajmera and senior executives have also apprised DGCA officials about their efforts to restart operations, and addressed their concerns. For the regulator, the main concern is airline’s financial sustainability, airworthiness, and consumer interest. Go First intends to start operations on July 1 and needs DGCA’s approval for it and sale of tickets.
While revival efforts are underway, Go First is also challenging engine manufacturer Pratt & Whitney’s (P&W’s) application for a stay on an arbitral award. On March 30, it secured interim relief from the Singapore International Arbitration Centre, which directed P&W to supply the airline with a certain number of spare engines until December 2023. P&W was ordered to take all reasonable steps and release without delay at least 10 serviceable spare leased engines within 28 days of the order and further 10 spare leased engines each month until December. (Source: The Business Standard)