Banks may finance Go First’s request for Rs 400 crore interim funding

Go First lenders are likely to support the airline’s request for Rs 400 crore interim funding to restart the operations.

Go First temporarily halted operations on May 2 and was admitted under the insolvency process on May 10. On Wednesday, the airline’s resolution professional Shailendra Ajmera submitted a business plan and a request for over Rs 400 crore to the airline’s committee of creditors (CoC).

The CoC comprises Go First’s lenders – Bank of Baroda, Central Bank, Deutsche Bank and IDBI Bank – which collectively have an exposure of over Rs 6500 crore to the airline. 

“Bank representatives met again on Thursday to discuss the airline’s funding request. The airline’s revival plan has been analysed,” said a person familiar with the process. The lenders are expected to decide in the next two-three days and after which boards of respective banks would authorise additional funding. The additional funds would be treated as interim finance which has priority over all other debt under the insolvency process.

Go First plans to operate around 150 daily flights with 22 aircraft in the initial phase. Ajmera and senior executives have also apprised DGCA officials about the restart efforts and addressed their concerns. For the regulator, the main concern is the airline’s financial sustainability, airworthiness and consumer interest.

Go First’s intends to start operations on July 1 and needs DGCA approval for the restart and sale of tickets. While revival efforts are underway, Go First is also challenging engine manufacturer Pratt & Whitney’s (P&W) application for a stay on an arbitral award.

On March 30, Go First secured interim relief from Singapore International Arbitration Centre when it directed P&W to supply the airline with a certain number of spare engines till December 2023. The engine manufacturer was ordered to take all reasonable steps and release without delay at least ten serviceable spare leased engines within 28 days of the order and a further ten spare leased engines each month until December.

P&W and Go First did not respond to queries. 

Earlier in May while opposing Go First’s enforcement application in a US court, the engine manufacturer said the airline has not right over engines. Go First is opposing P&W’s application before SIAC citing its revival efforts, it is learned.