Go Air lenders await DGCA’s flight plan
1 min read 12 Jun 2023, 11:33 PM ISTOn 9 June, the airline’s committee of creditors (CoC) met and decided to await approval from Directorate General of Civil Aviation’s (DGCA) before sanctioning additional loans.
PremiumMUMBAI/NEW DELHI : Lenders to Go Airlines (India) Ltd will wait for the aviation regulator’s decision on the airline’s revival plan before committing to any interim loan, two people aware of the discussions said.
On 9 June, the airline’s committee of creditors (CoC) met and decided to await approval from Directorate General of Civil Aviation’s (DGCA) before sanctioning additional loans.
While it is estimated that the airline might need ₹200 crore to resume flying, the people cited above said the quantum of additional finance would depend on the scale of operations the airline plans to run at the moment.
“There is no point in lending more if the regulator is not satisfied with the plan," said one of the people.
The airline has submitted a plan to the DGCA, which aims at starting with five aircraft and further increase it to 25 aircraft over a period of time, depending on a lot of factors, including funds for operations.
Bankers reviewed Go Air’s operational readiness and believe that since it has been able to retain 50-60% of pilots and a majority of ground staff, it could soon restart services. The long-drawn revival process of Jet Airways is also on the back of the lenders’ minds, given that it is yet to fly two years after a resolution plan was approved by the National Company Law Tribunal (NCLT).
According to the second person, lenders have been positive and have already had interactions with DGCA and civil aviation secretary, and are working on options. “We are fully ready in terms of people and infrastructure and eagerly awaiting the approvals," the person said on condition of anonymity.
Lenders have decided to replace Alvarez and Marsal’s (A&M) Abhilash Lal with EY’s Shailendra Ajmera as resolution professional, Economic Times reported on Monday. According to one of the people cited above, lenders felt EY is better-placed to handle an aviation insolvency. Lal’s name was proposed by Go Airlines as part of its voluntary insolvency application, as per the tribunal’s order on 10 May.
The airline owes lenders ₹6,521 crore. State-owned Central Bank of India is the lead lender of the consortium and has an exposure of ₹1,987 crore, of which ₹682 crore was sanctioned under the Emergency Credit Line Guarantee Scheme (ECLGS) scheme.
The sovereign-backed credit scheme, first introduced to aid small businesses during the pandemic, was later extended to other covid-hit sectors. Other lenders include Bank of Baroda, IDBI Bank, Deutsche Bank and US-based aircraft financier UT Finance Corp.
An email sent to Central Bank of India remained unanswered till press time, and a text message to former Go First chief executive Kaushik Khona remained unanswered.
The principal bench of the NCLT admitted Go Airlines’ insolvency application on 10 May. Earlier, the airline had announced its decision to approach the insolvency tribunal, terming it a result of the “ever-increasing number of failing engines supplied by Pratt & Whitney’s International Aero Engines, LLC". This, it said, has resulted in the airline having to ground 25 aircraft as of 1 May.