Having filed for bankruptcy on May 2, Go Airlines (India) Ltd, dba Go First (GOW, Mumbai International), owes banks a total of INR65.21 billion rupees (USD797 million), and defaults to these financial creditors are “imminent”, according to a bankruptcy document the company filed.
It had not defaulted on any of these debts as of April 30, but “considering the present financial situation of the corporate applicant, defaults to financial creditors would be imminent,” the news agency Reuters reported the filing as saying.
The document lists the Indian public sector banks Central Bank of India, Bank of Baroda, IDBI Bank, and Axis Bank as well as Germany’s Deutsche Bank among Go First’s financial creditors, although Axis Bank said in a stock exchange disclosure that it had no outstanding exposure to the troubled carrier.
Central Bank of India, which despite its name is not India’s central bank, and Bank of Baroda both have an exposure of INR13 billion (USD159 million) under a consortium loan, while IDBI Bank is owed INR500 million (USD6.1 million), according to the filing. But an unnamed official at Central Bank said its total exposure to the airline was closer to INR20 billion (USD24.5 million). The report did not specify the sum owed to Deutsche Bank. Sources told Reuters that the bankruptcy had caught the lenders unawares.
Go First has also borrowed INR12.92 billion (USD158 million) from the government under a Covid crisis credit scheme. Total liabilities to all creditors including financial institutions, lessors, and suppliers reach INR114.63 billion (USD1.4 billion), and “currently the assets of the company are not sufficient to meet its liabilities,” the filing said.
Lessors are owed INR26.6 billion (USD325 million), suppliers are owed INR12.02 billion (USD147 million). Lessors have sent Go First termination notices and some have initiated repossessions, the filing said, while six lessors have also invoked letters of credit that banks issued to them.
Go First currently operates a fleet of 54 aircraft including forty-nine A320-200Ns and five A320-200s. At least 52 of the aircraft are dry-leased to it by 12 lessors, according to the ch-aviation fleets module: Aviation Capital Group (four A320neo), BOC Aviation (one A320neo), CCB Financial Leasing (four A320neo), CDB Aviation (eleven A320neo), DAE Capital (one A320neo), ICBC Financial Leasing (six A320neo), Jackson Square Aviation (eight A320neo), Maverick Aviation Partnership (one A320ceo), Merx Aviation Finance (one A320neo), Minsheng Financial Leasing (five A320neo), SKY Leasing (one A320neo), and SMBC Aviation Capital (three A320ceo and six A320neo).
Proceedings begin
On May 4, proceedings on the insolvency in the courts began, in which the Wadia Group-controlled carrier entered its plea seeking voluntary insolvency resolution at the National Company Law Tribunal, The Hindu newspaper reported.
Neeraj Kishan Kaul, a lawyer representing Go First, said that the objective of the Insolvency and Bankruptcy Code is to ensure a company remains a going concern and not to ground it. Lessors stand opposed to the airline’s request. A two-member bench at the court opted to reserve judgement on the case.
Go First has now cancelled all flights until May 9, but India’s Directorate General of Civil Aviation said the carrier had suspended ticket sales until May 15 and was working to refund bookings or reschedule them to future dates. Go First CEO Kaushik Khona estimated that “77,000 passengers were affected by cancellations in the last 30 days.”
