The lenders of Go First have approved interim funding of over Rs 400 crore for the airline that could lead to the crisis-hit carrier resuming operations next month.
While the consortium of banks led by the Central Bank of India gave the in-principal approval of Rs 425 crore on Saturday, the lenders will have to take the green signal from their boards. The other lenders include IDBI Bank and Bank of Baroda.
After the boards give their approvals, the Directorate General of Civil Aviation (DGCA) will have to permit the budget carrier to restart operations.
There is an expectation that Go First will fly from next month.
Earlier this month, the airline submitted a revival plan to the aviation regulator under which it proposed to resume operations with a fleet of 26 aircraft and 152 daily flights.
In early May, the no-frills carrier filed for voluntary bankruptcy and suspended flights and said it owes Rs 6,521 crore to its lenders.
The airline has now cancelled all flights because of operational reasons till June 28.
While admitting the plea for voluntary resolution, the National Company Law Tribunal (NCLT) appointed Abhilash Lal as the Interim Resolution Professional on May 10, 2023,
However, the committee of creditors chose EY-backed Shailendra Ajmera as the resolution professional at their meeting on June 9, which was endorsed by the tribunal on June 15.
In its plea before the NCLT, Go First said it started receiving notices from lessors a year ago when it began to default on payments to them and vendors.
The airline alleged it faced financial distress because of defective engines supplied by Pratt & Whitney (P&W). Its aircraft were grounded and could not be taken off as a result.
The carrier later filed an emergency arbitration case against P&W before the Singapore International Arbitration Centre (SIAC). The emergency arbitrator passed awards directing P&W to supply 10 serviceable engines.
Go First alleged P&W failed to comply with the award by the arbitrator.
The airline initiated enforcement proceedings against P&W in Delawareand other relevant jurisdictions where the engines were located.
During the time of its application, Go First had 54 aircraft out of which 28 were grounded.
The suspension of operations by the airline had an impact on airfares which surged on various routes amid a revival in travel.
Nuvama Institutional Equities has reportedly forecast that the domestic aviation industry is moving towards a duopoly where Air India and IndiGo will have significant market share.
The brokerage said due to the grounding of the Go First fleet and no new aircraft additions for SpiceJet, the Indian aviation space will be left with two major players.
