Go First Creditors Approve Rs 425 Crore Interim Fund to Revive Airline
In a significant development for cash-strapped airline Go First, its creditors have given the green light to an interim finance of Rs 425 crore, aimed at reviving the airline. While the in-principle approval for the interim finance has been granted, the final decision rests with the boards of the respective banks involved.
The consortium lenders to Go First, namely Central Bank of India, Bank of Baroda, and IDBI Bank, will seek board approvals to sanction the interim finance. After obtaining the necessary approvals, the airline will proceed to seek permission from the Directorate General of Civil Aviation (DGCA) to resume its operations.
Go First
According to multiple sources, the low-cost carrier’s resolution professional, Shailendra Ajmera, had requested Rs 425 crore in interim finance from the airline’s financiers to kickstart a revival plan that would enable the airline to recommence its operations. The financing requirement may increase depending on certain factors such as the availability of functioning engines for the aircraft and ticket cancellations.
The committee of creditors of Go First presented the proposal for funds at a meeting held earlier this week. The airline reportedly intends to resume operations in July, with plans to operate 78 daily flights utilizing 22 aircraft. Go First’s fleet has remained grounded since May 3, creating significant challenges for the airline.
As per the Go First bankruptcy filing, the creditors owed by the airline include the Central Bank of India, Bank of Baroda, IDBI Bank, and Deutsche Bank, with a total outstanding debt of Rs 6,521 crore.
In early May, Go First halted its flight operations and filed for bankruptcy at the National Company Law Tribunal (NCLT) due to mounting losses. The primary cause of these losses was the delays in the delivery of engines by Pratt and Whitney, which resulted in the grounding of a portion of its fleet. The airline is optimistic about a swift resolution and the revival of its operations.
The grounding of Go First flights had reportedly exerted pressure on airfares, particularly on select routes where the airline had a significant presence.
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