Lenders set to extend Rs 400 crore to Go First to see it fly again
Go First’s lenders have agreed in principle to support the airline’s application for Rs 400 crore interim financing to resume operations.
Go First temporarily suspended flights on May 2 and was admitted under bankruptcy process on May 10. And on Wednesday, April 21, airline resolution expert Shailendra Ajmera submitted a business plan and demand of more than Rs 400 crore to the airline creditors committee (Code of Conduct).
The Code of Conduct includes Go First lenders, Bank of Baroda, Central Bank, Deutsche Bank and IDBI Bank. Collectively they have an exposure of over Rs 6,500 crore to the airline. Bank representatives met again on Thursday to discuss the airline’s financing application.
While the lenders have given the nod in principle, additional financing will require approvals from the boards of the respective banks. The board’s decision will be taken once the plans have been approved by the Directorate General of Civil Aviation.
The additional funds will be treated as temporary financing that takes priority over all other debts under the insolvency process.
“The lenders are trying to make a unanimous decision so that they all lend additional money,” a source said.
Go First plans to operate about 150 daily flights with 22 aircraft. It also plans to operate charter flights for the defense forces in the initial stage.
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 intends to start flying on July 1 and needs approval from the Directorate General of Civil Aviation to sell tickets and take to the skies again.
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 a temporary exemption from the Singapore International Arbitration Centre, which directed P&W to supply the airline with a certain number of spare engines until December 2023.
The engine manufacturer was ordered to take all reasonable steps and to release without delay at least ten serviceable leased spare engines within 28 days of order and another ten leased spare engines each month through December.
P&W and Go First have not previously responded to inquiries business standard.
Earlier in May, while disputing the Go First application in a US court, P&W said the airline had no right to the engines. Go First opposes P&W’s application before SIAC cited efforts to revive it.
Shailendra Ajmera of consulting firm EY named her decision professional on June 9
Ajmera presents a business plan and requests more than Rs 400 crore to restart the airline
Lenders agree in principle to fund the restart