India's Go First (Mumbai International) is facing a critical cash shortage as lenders refuse to extend further credit amid uncertainty about aircraft availability. The airline suspended flights and filed for insolvency in early May but has clearance to borrow INR4.5 billion Indian rupees (USD54.1 million) to fund its restart and short-term working capital needs. However, with lessors wanting to repossess the carrier's entire fleet, banks are reluctant to lend to an airline potentially without any aircraft.
The Mint outlet reports that Go First's resolution professional, Shailendra Ajmera, the Indian equivalent of an insolvency administrator, has permission from the airline's committee of creditors to approach banks to raise funds. However, despite some initial willingness, no funds have materialised. Reportedly a stumbling block is a recent court decision allowing certain lessors access to their aircraft for inspection and maintenance purposes.
"Since there is no guarantee on aircraft availability due to that order, the airline’s resolution professional has not been able to raise funds, thus, delaying the resumption process," sources close to talks told the outlet. "It is delayed and may not happen, if the aircraft are not made available."
As reported in ch-aviation, Go First's 12 aircraft lessors have indicated that they wish to repossess all of the airline's now-parked 54 aircraft. So far, court decisions have prevented that from happening, but increasingly assertive lessors appear more and more unwilling to have their aircraft involved in any relaunch.
The cash-at-hand situation at the airline is reportedly dire, with multiple Indian media outlets now reporting Go First's remaining employees have not been paid since May. Many were induced to stay on by promised retention bonuses and a swift restart of operations. The Times of India says 150 employees, including 30 pilots, 50 cabin crew, and 50 ground handling and engineering personnel, have resigned over unpaid salaries in the last two weeks, further hampering Go First's plans for a smooth restart of flights.
Meanwhile, according to India's Economic Times, Ajmera is seeking emergency funding of INR1 billion (USD12 million) to meet immediate expenses such as insurance and maintenance. A source said the money was "essential to sustain operations." Both the Bank of Baroda and the Central Bank of India have been approached. Both banks are major Go First creditors and among the financial entities interested in funding the airline's restart. However, as Go First is now classified as a distressed asset, the respective bank's internal lending criteria make approving any further loans difficult.
