Lenders to Go First have asked the resolution professional, Shailendra Ajmera to present a “viable resolution plan” before they go to their respective boards to seek approval for extending an interim funding of around 450 crore to the airline.
According to banking sources, the RP is yet to come up with a “concrete, viable plan”. “At some point in time, there will be a viability discussion and that is how we look at all businesses, if a business is viable then you support that. It is too premature at this stage,” banking sources said. “At the end of the day, there has been a near-death event for the airline. It is also true that the sooner it flies again the better but the fact is you must establish the viability of that operation and in particular, size and configuration, and once it is done then all options are open,” sources added.
As reported earlier, Go First has sought an interim funding of Rs 450 crore to restart its operations.
The committee of creditors are fine in-principle with the amount sought, but cannot disburse the money unless the boards of the respective banks give their nod. Only once the CoC has approved the airlines’ resolution plan will the directorate general of civil aviation (DGCA) entertain the carrier’s plea to restart operations.
The CoC comprises Central Bank of India
Go First, which filed for voluntary insolvency on May 3, owes Rs 6,521 crore to its financial creditors, according to its filings with the National Company Law Tribunal. Of this, Rs 1,300 crore has been drawn under the government’s emergency credit line guarantee scheme (ECLGS). Upon including the dues of the vendors, the total dues of the airline stands at Rs 11,463 crore.
The airline’s operations is currently suspended till June 28.
The draft revival plan of Go First entails deploying 22 aircraft for operations and keeping four in reserve to meet any contingency.
The airline has said that once the DGCA approves its revival plan, it can start chartered flights between Delhi-Srinagar and Delhi-Leh immediately by deploying two aircraft. Within the next few days it will be able to resume scheduled services, mainly on the Pune, Bardogra, and Goa routes. The airline has said that it will be able to deploy 8-10 aircraft for the scheduled services.
Go First’s RP, Ajmera had met with the DGCA officials last week to apprise them of the meetings being held by the CoC. Sources said that he’s scheduled to meet the aviation regulator again on Wednesday.
Go First has also informed the DGCA that it has 400 pilots on its rolls and has offered retention allowance to them as well as first officers. It has offered to raise monthly salaries of captains by Rs 100,000 and that of first officers by Rs 50,000. Currently, the monthly average salary of captains is Rs 530,000. The increased salaries will come into effect from June 1.
Go First has 7,000 employees on its rolls and the NCLT has directed it not to retrench any staff.
The carrier has also communicated that oil marketing companies have offered their support. Before the carrier filed for insolvency, OMCs had put its operation on cash and carry terms, which means it had to clear its dues on a daily basis. It has also said that travel agents have offered their support with regard to ticketing services.
The main challenge before the airline, however is to retain its aircraft as lessors have approached DGCA for deregistration of 45 of them. Though the NCLT and National Company Law Appellate Tribunal have rejected their plea, the lessors have moved the Delhi High Court where the matter is sub judice.
The airline has a total fleet strength of 54. Of this, 28 aircraft are grounded due to engine issues with Pratt & Whitney, and 26 are operational.