Banks may finance Go First’s request for Rs 400 crore interim funding

Go First lenders are likely to support the airline’s application for a Rs 400 crore interim financing to restart operations.

Go First temporarily ceased operations on May 2 and was admitted under bankruptcy process on May 10. And on Wednesday, airline resolution expert Shailendra Ajmera submitted a business plan and demand of more than Rs 400 crore to the airline’s Creditors Committee (CoC).

The Code of Conduct comprises Go First’s lenders – Bank of Baroda, Central Bank, Deutsche Bank and IDBI Bank – who collectively have exposure of more than Rs 6,500 crore to the airline.

“The bank’s representatives met again on Thursday to discuss the airline’s financing request. The airline’s revival plan was analysed,” said a person familiar with the process. The lenders are expected to make a decision within the next two to three days after which the boards of the respective banks will authorize the additional financing. The additional funds will be treated as temporary financing that takes priority over all other debts under the insolvency process.

Go First plans to operate around 150 daily flights with 22 aircraft in the initial phase. Ajmera and the senior executives also briefed DGCA officials about the restart efforts and addressed their concerns. For the regulator, the main concern is the airline’s financial sustainability, airworthiness and consumer interest.

Go First’s intends to start operations on July 1 and needs approval from the Directorate General of Civil Aviation to restart and sell tickets. While the repair effort is under way, Go First is also challenging engine manufacturer Pratt & Whitney (P&W)’s application for accommodation in an arbitration award.

On March 30, Go First was granted temporary relief from the Singapore International Arbitration Center when it directed P&W to supply the airline with a certain number of spare engines on lease until December 2023. Serviceable spare engines on lease within 28 days of order and ten additional engines on lease each month through December .

P&W and Go First did not respond to inquiries.

Earlier in May, while disputing Go First’s enforcement application in a US court, the engine manufacturer said the airline had no right to the engines. Go First opposes P&W’s application before SIAC cited efforts to revive it.