‘Back on track’. Lenders of GoFirst in favour of insolvency petition

Lenders of GoFirst, the airline owned by the Wadia Group, are reportedly in favour of of the insolvency petition filed against the company, as they believe its potential for survival is higher than that of Jet Airways during its grounding.

Sources indicate that the airline’s promoters have provided assurances that it will continue to operate if an interim moratorium is granted. The National Company Law Tribunal (NCLT) is expected to announce its verdict on the airline’s plea on Wednesday.

However, the travel agents’ body Travel Agents’ Association of India (TAAI) is against the petition being accepted. “Even at the time when Jet Airways was grounded, only eight per cent of the total dues owed to the travel agents were recovered,” said Jyoti Mayal, President of TAAI, in a meeting with Jyotiraditya Scindia, Minister of Civil Aviation. 

Also read: DGCA asks Go First to stop ticket sales

But bankers and promoters have a different view. “When Jet Airways went down, it was dragged by the lenders to the NCLT. In this case, GoFirst’s position financially is better. We are in favour of NCLT admitting GoFirst’s insolvency petition. This way, the  assets, especially the aircraft, will be preserved,” sources said.

Wadia-group owned GoFirst filed its petition on May 2. The airline also sought an interim moratorium in order to stop the lessors from taking back their aircraft. On May 9, de-registration request for nine aircraft was filed. This takes the total de-registration requests to 45 out of 54 aircraft.

NPA account?

According to a banker, whom businessline spoke with, said that promoters have assured banks that the airline will function if interim moratorium is granted. “The promoters have assured us that they’re committed to getting the airline back on track,” the banker said.

However, if the insolvency petition is admitted, the lenders will need to declare GoFirst’s account as an NPA. To date, the banks have not taken any action regarding this matter. In court, GoFirst has said that the consortium froze its accounts after the lessors began to invoke Letters of Credit.

When asked if the Ministry had guided the lenders to infuse funds, one of the lenders said: “We are willing to restructure if push comes to shove. However, we haven’t been guided by the ministry to infuse more funds into the airline. Even the promoters haven’t sent a proposal or request additional funding. Anyway, we will surely be more cautious to infuse more funds in the airline anymore.”

Also read: Disheartened Go First pilots rush to Air India’s jobs drive

GoFirst’s lenders include Central Bank of India, IDBI Bank, Bank of Baroda, and Deutsche Bank, among others. 

Total liabilities

The airline’s total liabilities to all creditors stood at ₹11,463 crore, which includes dues to banks, financial institutions, vendors and aircraft lessors. Of these, the amount owed to financial institutions stood at ₹6,521 crore. The company has defaulted on payments to operational creditors, including ₹1,202 crore to vendors and ₹2,660 crore to aircraft lessors.

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