Lenders set to extend Rs 400 crore to Go First to see it fly again

Go First lenders have agreed in-principle to support the airline’s request for Rs 400 crore interim funding to restart operations.

Go First temporarily halted flights on May 2 and was admitted under the insolvency process on May 10. On Wednesday, April 21, the airline’s resolution professional Shailendra Ajmera submitted a business plan and a request for over Rs 400 crore to the airline’s committee of creditors (CoC).

The CoC comprises Go First’s 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 funding request.

While the lenders have given an in-principle nod, the additional funding would require approvals from respective bank boards. Board sanction will be taken once the Directorate General of Civil Aviation 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 of them loan extra funds,” said a source.

Go First plans to operate around 150 daily flights with 22 aircraft. It also plans to operate charter flights for defence forces in the initial phase.

Ajmera and senior executives have also apprised 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 DGCA approval to sell tickets and take to the skies again.

While revival efforts are underway, Go First is also challenging engine manufacturer Pratt & Whitney’s (P&W) application for a stay on an arbitral award.

On March 30, Go First secured interim relief from Singapore International Arbitration Centre, which directed P&W to supply the airline with a certain number of spare engines till December 2023.

The engine maker was ordered to take all reasonable steps and release without delay at least ten serviceable spare leased engines within 28 days of the order and another ten spare leased engines each month until December.

P&W and Go First did not respond to queries sent by Business Standard.

Earlier in May, while opposing Go First’s enforcement application in a US court, P&W said the airline has no right over engines. Go First is opposing P&W’s application before SIAC citing its revival efforts, it is learnt.

Go First temporarily halts operations on May 2

Airline’s insolvency application accepted on May 10, moratorium announced

Shailendra Ajmera of consultancy EY named resolution professional on June 9

Ajmera submits business plan and request for over Rs 400 crore to restart the airline

Lenders agree in principle to finance the relaunch