Creditors of Go First (Mumbai International) have submitted INR237.8 billion (USD2.91 billion) in claims against the insolvent carrier, while 40 potential buyers have formally lodged expressions of interest (EOI), a Reuters report says.
The report cited a banking source not authorised to speak publicly and followed a Go First creditors' meeting on July 21. Aircraft lessors have lodged approximately INR180 billion (USD2.2 billion) in claims, with the remainder coming from lenders. Indian bankruptcy law allows all creditors of an insolvent entity to seek payment of debts when that entity enters into administration. The claims process is managed by a resolution professional, in this case, Shailendra Ajmera, a partner at EY India.
Following last week's creditor meeting, the banker disclosed the number of potential Go First buyers but added that none had progressed beyond the EOI stage and formally lodged a buy bid. The EOI process ends on August 9.
Meanwhile, also on July 21, after initially expressing some concerns, India's Directorate General of Civil Aviation (DGCA) approved Go First's relaunch operating 15 aircraft to eight airports, subject to nine conditions. In addition to the standard certification, airworthiness, and safety requirements, the approval specifies that Go First "shall submit the proposed flight schedule, commensurate with the available resources in terms of airworthy aircraft, qualified pilots, cabin crew, AMEs, flight dispatchers etc., for the consideration of DGCA after making requisite arrangements for the commencement of scheduled flight operations, including the interim funding required for resumption of operations."
The DGCA also says scheduled flights can only start after interim funding is secured and the proposed flight schedule is approved. Go First is also barred from selling any flight tickets until this happens.
Speaking to Go First employees after news of the DGCA approval broke, CEO Kaushik Khona said the low-cost carrier would get back into the air, operating the 116 daily flights per the approved resumption plan and adding, "we will get more engines and fly more."
Talks continue with lenders to secure the necessary funding to restart Go First. The Economic Times reports the airline has approached asset reconstruction companies and distressed debt funds for short-term financing. At the same time, the Bank of Baroda and the Central Bank of India have agreed to lend INR4.5 billion (USD55 million) for initial working capital purposes, albeit at an interest rate of 20% p.a. However, because Go First is classed as a non-performing asset, securing the requisite approvals from the two banks may take some time, hence the approaches to other sources of capital.
"The funding plan from lenders is clear. They are encouraged by the approval given by the DGCA. While as part of the process, it is necessary to examine other sources of funds, the Bank of Baroda and Central Bank of India will fund it," a source told the publication. "If the plan works, it can then be repaid earlier with cheaper funds from banks replacing those lenders. So, in a way, it is a temporary solution."
