Go First Could Secure Higher Financing Than Previously Planned

Summary

• Go First may receive more cash than initially planned, allowing it to restart operations with a smaller fleet of 10-15 aircraft.
• The airline owes over ₹65 billion to financial and operational creditors and is also working on a refund plan for its customers.
• Test flights have already begun as part of the flight resumption process, and Go First is reportedly in talks with airports to regain its slots.

India’s grounded low-cost airline Go First could end up getting more cash than planned and restart operations with a limited fleet. The airline has been conducting test flights lately, suggesting that the flight resumption process is underway. Still, it stares at a challenging road ahead, with multiple issues, including that of ticket refunds.

More cash sought

Go First could restart operations with a funding of around ₹6-7 billion ($72-84 million), according to a report by Mint. This is more than the initial interim funding of ₹4-5 billion ($48-60 million) that was sought.

But the revision in funding also comes with a modification in the flight resumption plan. Earlier, Go First was supposed to restart flights with a fleet of around 26 airplanes. But with more funding, it will start at a smaller scale with around 10-15 aircraft.

Sources have told Mint that it is believed that the best way forward for Go First is to have more “cash in hand” with a smaller fleet to ensure stable operations. This will enable the airline to have better infrastructure and enough to compensate its employees in the near future.

Go First owes more than ₹65 billion ($787 million) to financial creditors, such as the Central Bank of India Ltd, IDBI Bank Ltd, and Axis Bank Ltd, among others. It has also been unable to keep its payment commitments to operational creditors, including aircraft lessors.

Ticket refund plan

Go First also faces the daunting task of issuing refunds to customers. The National Company Law Tribunal (NCLT) has asked for the consent of Insolvency and Bankruptcy Board of India (IBBI) and the Committee of Creditors (CoC) on the airline’s roadmap for issuing ticket refunds.

Go First’s Resolution Professional (RP) has said that the carrier will repay through credit issued to passengers and travel agents as well as payment once ticket sales start and revenue is generated through flights. Meanwhile, the airline has updated its website, stating that flight operations remain suspended until August 3rd.

The NCLT, however, has sided with Go First and rejected its lessors’ request to refrain the airline from using the leased aircraft. Go First has been at loggerheads with its lessors, who are dissatisfied with the treatment given to their rights during this entire process.

Flight resumption process underway

Even as it sorts out its funding, Go Fist has started with test flights in the run-up to its planned business resumption. The test flight is one of the mandatory requirements in which airlines must prove that their aircraft are ready for operations. Last week was the first time Go First flew its Airbus A320 aircraft since halting operations in May.

Go First is reportedly also in conversation with airports to hand over its slots. The carrier’s slots were given to other airlines on an ad-hoc basis, but the airline has reportedly asked for its slots to now be restored.

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Source: Mint