Go First (Mumbai International) is attempting to secure a short-term loan to fund operations during its bankruptcy period, according to Bloomberg. The news comes as India's Directorate General of Civil Aviation (DGCA) identified problems with the airline's restart plan, and high levels of cancelled leases mean Go First may need to negotiate and sign new ones before any flights resume.
Sources "close to the talks" told Bloomberg that Go First and its resolution professional, Shailendra Ajmera, a partner at EY India, are talking to multiple potential funders, including Hong Kong-based SC Lowy and New York-based Cerberus Capital Management. SC Lowy styles itself as a specialist in "high yield, distressed, event-driven and private structured credit", while Cerberus says it is an alternative investment firm with USD60 billion in assets across complementary credit, private equity, and real estate platforms.
Discussions are reportedly about a INR4.5 billion Indian rupee (USD54.9 million) one-year loan to help capitalise Go First during its bankruptcy period. Meanwhile, the DGCA has found Go First does not have the ground and flight crew numbers necessary to service the number of flights proposed in the restart plan.
Again citing unnamed sources, India's Economic Times says the DGCA has indicated Go First needs to either hire more personnel or scale back its restart ambitions. "Available strength of captains, instructors, engineers, and flight dispatchers are insufficient for the proposed scale of operations," reads a leaked DGCA document. Go First, which paused all flight operations in early May, wants approval (and funding) to resume operations with approximately 22 aircraft. Go First told the DGCA it still had 115 captains and 225 first officers on the payroll in June. However, local regulations require a carrier to have at least six captains and six first officers per operational narrowbody aircraft. Go First fleet comprises mostly A320-200Ns, but also some A320-200s.
In response, Ajmera has reportedly told the DGCA that rather than hire additional staff, Go First will slim down its restart plans to 114 daily flights using 15 aircraft. However, aircraft lessors cancelling leases since the airline filed for insolvency may also slow down restart plans. The Mint outlet reports that lessors have revoked 30 to 35 aircraft leases. While Go First has 54 aircraft in its fleet, that number needs to take into account the aircraft lessors are seeking to repossess and the aircraft out of service due to Pratt & Whitney engine issues. Twenty-seven aircraft were operational in the lead-up to the suspension of flights.
"While the airline is making active efforts to relaunch flight operations, it will still need to re-enter into fresh lease agreements or get the termination revoked by lessors in case it wants to operate those aircraft whose lease agreements were terminated around the time the airline filed for insolvency," a source said.
