Expression of Interest sought in Go Airlines possible sale

A resolution professional appointed to oversee the insolvency process of Go Airlines (India) Ltd. has invited expressions of interest in selling the carrier as part of the process.              

The airline declared bankruptcy in May and blamed "faulty" Pratt & Whitney engines for grounding about half of its 54 Airbus A320neo planes.

The engine company, for its part, said the airlines' claims were without merit.

According to the regulations, the issuance and publication of Form G - related to the invitation to the EoI — would be the “next step scheduled to bring the bankruptcy to its logical conclusion,” Abhirup Dasgupta, partner at HSA Advocates, said.

Meanwhile, the lenders have raised concerns about the Delhi High Commissioner's order restricting the airline from removing any part of the aircraft it intends to fly.

The lessors own the aircraft, but are now stuck because the NCLT has placed a moratorium on repossession of the aircraft due to the ongoing IBC process.          

The creditors' committee previously approved a financing of Rs. 425 crore. However, they are concerned that such a requirement would be an obstacle to doing business.

On Friday, resolution professional Shailendra Ajmera filed an appeal with the Delhi High Court to challenge the order.

The airline, branded Go First, has ceased flying and filed for bankruptcy with the National Corporation Law Court (NCLT) on May 2 due to cash problems and after grounding more than half of its 54 aircraft due to supply problems from the US carrier engine manufacturer

The suspended airline owes creditors, led by India's central bank, more than Rs 6,500 crore. The central bank has Rs 1,987 crore of outstanding loans, including about Rs 650 crore from post-Covid hotlines.

Singapore court order expected later this month would be key to Go First's survival.

If the court does not grant Go First relief and order Pratt & Whitney (P&W) to replace the faulty engines, the airline will not be able to fly, which could jeopardize the entire recovery process, people familiar with the process told the newspaper.

While the Singapore International Arbitration Award ordered P&W to ship about 20 engines by December 2023, the engine manufacturer later challenged it citing non-payment by the airline and existing global supply chain shortages. In its petition, which was reviewed, P&W alleged that the airline owed it more than $100 million.

Current trends show that at least six engines could fail by November 2023, said a person familiar with the Go First business plan.

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