Go First: Bids to open on February 23 as lenders look for suitors for grounded airline

Go First: Bids to open on February 23 as lenders look for suitors for grounded airline

Go First airline: The lenders of Go First and the committee of creditors are scheduled to meet on Friday to review the bids for the bankrupt airline on February 23. The lenders and the IRP will open the bids during the meeting. Last week, a consortium of Ajay Singh, SpiceJet owner and Nishant Pitti – co-owner of online travel firm EaseMyTrip, placed a bid for Rs 600 crore and they are the frontrunners for the bid.

The other bid has been tabled by Sharjah-based company SkyOne, which is controlled by Jaideep Mirchandani, who also has a majority stake in Zoom Air which has been grounded for over five years. The bids will now undergo due diligence, which is expected to conclude in the second half of March.

The lenders intend to initiate sales of their assets in order to offset the financial damages experienced from their involvement with the airline. Shailendra Ajmera, a resolution professional, has admitted the claims amounting to approximately Rs 4,300 originating from financial creditors. The airline’s slots, bilateral rights and real estate space-like offices are part of the asset on sale, the Economic Times reported.

Go First owes banks around Rs 6,521 crore, of which Rs 1,300 has been drawn under the government’s emergency credit line guarantee scheme (ECLGS). The total dues of the carrier after adding up the claims of vendors and lessors goes up to around Rs 11,463 crore.

Budget airline SpiceJet, which itself is grappling with financial difficulties, is currently working on a revival plan. Recently, it completed the first tranche of capital infusion of Rs 744 crore, with additional subscriptions pending regulatory approval. The company has also initiated the process to raise an additional Rs 1,000 crore. SpiceJet already holds shareholder approvals to raise up to Rs 2500 crore through the qualified institutional placement (QIP) route.

Last year in May, low-cost airline Go First decided to initiate a voluntary insolvency process through the National Company Law Tribunal (NCLT). The cash-strapped airline blamed Pratt & Whitney (P&W) engines and recurring technical issues for its failed operations.

The increasing failure rates of engines provided by the International Aero Engines division of P&W compelled the temporary suspension of 25 Airbus A320neo aircraft operations, representing half their fleet and further aggravating Go First’s financial duress. Accordingly, from May 3 onwards all flights were suspended indefinitely until further notice could be given for operational resumption.

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