Chennai: Even though the Wadia group has approached the National Company Law Tribunal (NCLT) voluntarily to protect their leased planes from being repossessed, there exists the risk of other interested groups bidding for Go Airlines (India) Ltd, said Supreme Court advocate.
“The risk of some other interested group making a bid for Go Airlines that may be attractive for the creditors is always there. Go Airlines might have gone to NCLT voluntarily with an intention to retain its assets, but the risk of facing rival bids does hang over the promoters heads like the Damocles sword,” D. Varadarajan, Supreme Court advocate specialising in corporate laws, told IANS.
The purpose of NCLT is to resolve the issues fast, he added.
Queried about the firewall that the promoters have built around Rs 7,100 crore-turnover Go Airlines against rival bids before landing in NCLT, Kaushik Khona, Chief Executive Officer told IANS in an interview: “The process of NCLT and the IBC (The Insolvency and Bankruptcy Code) will be followed once the application is admitted. The question (takeover bids) is hypothetical to be addressed.”
Khona said the airline promoters — the Wadia group — are interested to be in the business and the purpose of approaching the NCLT is to retain the aircraft as the lessors are taking action to repossess them.
He also said the idea of promoters rebidding for the airlines was not thought of while approaching the NCLT. The insolvency petition is not a ruse to get loan write offs.
“We have not asked the banks to take a haircut (write off a portion of their loan,” Khona said.
According to reports, the airline has a total liability — dues to banks, other creditors, vendors etc. — of about Rs 11,463 crore.
The Indian government owned Central Bank of India said its outstanding exposure to Go Airlines as on March 31, 2023 is Rs 1,305 crore and an additional amount of Rs 682 crore sanctioned under the Emergency line of credit guaranteed by the Government of India.
The airlines have defaulted on its payment dues to aircraft lessors and others but not to the banks and the account has not been classified as a non-performing asset (NPA) by the bankers.
With nearly 50 per cent of its A320neo fleet grounded, India’s third largest airline Go Airline has approached NCLT for resolution under Section 10 of the IBC.
The airline said it has approached the NCLT, “…due to the ever-increasing number of failing engines supplied by Pratt & Whitney’s International Aero Engines, LLC, which has resulted in GO FIRST (airline brand) having to ground 25 aircraft (equivalent to approximately 50 per cent of its Airbus A320neo aircraft fleet) as of May 1, 2023.”
The petition is being heard by NCLT for admission.
According to Khona, if the petition is admitted by the NCLT then there will be a moratorium and the appointment of an Interim Resolution Professional (IRP) will be automatic.
In its petition, Go Airlines has suggested the name of a person to be appointed as the IRP and Khona said it is for the NCLT to decide on that.
Khona also said the airline had got enquiries for leasing for more aircrafts.
He said the aircrafts will be up in the air in 7/8 days once the petition is admitted.
Citing FY23 revenue of about Rs 7,100 crore Khona said even with a reduced fleet size the airline was able log such a revenue.
“We want more aircrafts on wet lease or dry lease,” he said.
In its petition, Go Airlines has suggested the name of a person to be appointed as the IRP and Khona said it is for the NCLT to decide on that.
As to the funds to restart operations, Khona said the airline is yet to draw the balance of Rs 208 crore of the Rs 1,500 crore sanctioned under the Emergency Line Credit Guarantee Scheme (ELCGS).
According to Khona, the airlines need about Rs 17-18 crore per day for its operations as the trade partners may provide the needed items — fuel and others — on cash and carry basis.
On the availability of pilots to fly the aircraft as many have started attending interviews held by rivals Khona said: “I have the pilots to fly all the 54 aircrafts. We have a huge fleet of pilots.”
Khona said the majority of the pilots have not left the company even during the Covid-19 period and added that it takes about six months for a pilot to fly an aircraft after joining a rival.
He did agree that the salaries for the ground staff have been paid while the April salary for the professional and others is pending.
Khona does not want to think about the chance of NCLT not admitting the insolvency petition as IBC wants every business to be up and running and in the case of airlines up and flying.
–IANS