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Lenders to the grounded airline Go First, which is facing insolvency proceedings, are considering granting interim finance to the grounded airline to implement its proposed revival plan.
The total debt outstanding of the airline stood at over Rs 6,000 crore as of the end of April 2023. Go First had voluntarily filed for insolvency resolution proceedings before the Delhi bench of the National Company Law Tribunal (NCLT) on May 2, which the tribunal 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 bankers see clear visibility (in revival plan), they will be willing to give funds (to Go First),” said a banker.
Earlier this month, the airline submitted a revival plan to the aviation regulator Directorate General of Civil Aviation (DGCA). According to a PTI report, it proposed to restart operations with 26 planes and 152 daily flights.
When contacted, Go First did not respond to a mail seeking comment on interim funding from banks and the revival plan.
The lenders to the airline – 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 on April 28, 2023, as per NCLT order.
Last month, Central Bank, which is the consortium leader, said that its outstanding exposure to Go First Airline as on March 31, 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 collateralized by way of tangible collateral security and corporate guarantees, the bank’s Managing Director and CEO Sanjiv Chadha said last month. Besides, the bank also has exposure that the government guarantees. In Q4 FY2023, the bank provided Rs 500 crore for the account.
On June 9, a PTI report said that the representatives from all four banks visited the Go First office, and after a meeting, they set up the CoC. The lenders discussed various aspects with Go First executives and how to proceed.
“The CoC is now expected to take up the revival plan of Go First and once it is cleared, the same will be submitted to the DGCA,” the report said.
The cash-strapped airline suspended its operations from May 3.
Last Friday, Go First, in a statement issued on Twitter, said that it extended cancellation of flights till June 14, 2023 due to operational reasons.
“We regret to inform that due to operational reasons, Go First flights scheduled till 14th June 2023 have been cancelled. We apologise for the inconvenience caused by the flight cancellations,” the statement read. The airline said it will refund the full money to the passengers of the cancelled flights.
