Lenders to ground carrier Go First, which is facing insolvency, are considering providing interim financing to the ground carrier to implement its proposed revival plan.
The airline’s total outstanding debt stood at over Rs 6,000 crore as at the end of April 2023. Go First had voluntarily filed insolvency proceedings with the Delhi court of the National Company Law Tribunal (NCLT) on May 2, which the court on May 10 admitted.
The airline’s Committee of Creditors (CoC) met for the first time on June 9 to discuss its revival plan.
As part of the revival plan, the airline has sought funding of Rs 400 crore from its lenders to resume operations, according to a person familiar with the matter. “If the bankers see clear visibility (in the reactivation plan), they will be willing to give funds (to go first),” said one banker.
Earlier this month, the airline submitted a reactivation plan to the aviation regulator Dirección General de Aviación Civil (DGCA). According to a PTI report, he proposed restarting operations with 26 aircraft and 152 daily flights.
When contacted, Go First did not respond to an email seeking comment on the banks’ interim financing and restart plan.
The airline’s lenders (Central Bank of India, Bank of Baroda (BoB), IDBI Bank, Deutsche Bank and UT Finance Corporation) have an exposure of Rs 6,521 crore as of April 28, 2023, according to the NCLT order.
Last month, the Central Bank, which is the leader of the consortium, said that its outstanding exposure to Go First Airline as at 31 March 2023 was Rs 1,305 crore and an additional amount of Rs 682 crore was sanctioned under the emergency line of credit guaranteed by the Government.
BoB’s exposure to the airline is close to Rs 1,300 crore. Of this, Rs 1,000 crore is secured by tangible collateral and corporate guarantees, the bank’s managing director and chief executive officer, Sanjiv Chadha, said last month. In addition, the bank also has exposure that the government guarantees. In the fourth quarter of FY2023, the bank provided Rs 500 crore for the account.
On June 9, a PTI report said that representatives of the four banks visited the Go First office and, after a meeting, established the CoC. The lenders discussed various issues with Go First executives and how to proceed.
“The Go First revival plan is now expected to be taken over by the CoC and once authorized, the same will be submitted to the DGCA,” the report says.
The cash-strapped airline suspended operations effective May 3.
Last Friday, Go First, in a statement posted on Twitter, said it had extended the flight cancellation until June 14, 2023 for operational reasons.
“We regret to inform you that, for operational reasons, Go First flights scheduled until June 14, 2023 have been cancelled. We apologize for the inconvenience caused by flight cancellations,” the statement read. The airline said it will fully refund passengers for the canceled flights.