Will this ₹7,000-crore rescue plan save Go First?

Go First’s committee of creditors on Friday discussed this bid, as well as a rival bid from Sky One, the people cited above said on condition of anonymity.

“The joint bid by Singh is higher than the other party (Sky One). The committee of creditors will announce their decision in 15 days after further discussion and assessment,” one of two people said. Sky One’s bid amount could not be ascertained.

The Go First rescue attempt received a fresh lease of life last week after receiving two bids. The carrier, which has been grounded since May 2023, has been undergoing an insolvency process since then. SpiceJet chairman and managing director Singh submitted his bid jointly with Busy Bee Aviation. Nishant Pitti, co-founder of online travel platform EaseMyTrip, has a 51% stake in Busy Bee Aviation, while the remaining 49% stake is held by local investors.

“The joint-party bid has made an upfront payment of ₹300 crore. As per their proposed plan, they are likely to monetize the land assets of Go First for the amount owed to the banks,” the second person cited above said.

Queries sent to SpiceJet, Ajay Singh, and Sky One remained unanswered. When contacted, Pitti said the bid remains ‘confidential.’

“Our bid for launching the airline remains confidential, guarded by the committee of creditors (CoC) until a successful bidder is announced. With a clear objective in mind, we are poised to commence operations swiftly, ensuring GoFirst takes to the skies without delay,” Pitti said.

Go First owes ₹6,521 crore to lenders, including Bank of Baroda, Central Bank of India, Deutsche Bank and IDBI Bank.

“Busy Bee Aviation sees potential in the land assets of Go First, which are estimated to be worth around ₹10,000 crore and the expected compensation from engine manufacturer Pratt & Whitney for engine grounding will also be key in the revival plans. SpiceJet will help in the operations while Busy Bee will focus on funding requirements,” an industry executive said on condition of anonymity.

The second bid was submitted by Sharjah-based aviation company Sky One, which specializes in a wide array of aviation services such as cargo charters, asset trading, pilot training, and maintenance, repair, and overhaul (MRO) among others.

Shares of SpiceJet ended up 0.64% at ₹67.41 on the BSE on Friday.

The two bids were submitted on 16 February to the resolution professional (RP) for consideration by the CoC as per the insolvency process. On 13 February, the National Company Law Tribunal (NCLT) approved a 60-day extension to Go First to resolve its insolvency woes.

The extension was granted after the RP Shailendra Ajmera, had informed the court that the airline has received interest from three potential buyers, all of whom have already deposited funds.

This is the second time in five years that there has been potential interest in reviving a grounded carrier in Indian aviation.

In April 2019, Jet Airways, the second-largest carrier in Indian skies at the time, had to ground operations due to financial distress.

The insolvency process for the airline had begun in June 2019, and the NCLT had approved a resolution plan by Jalan-Kalrock Consortium (JKC) in June 2021, which proposed investing a total of ₹1,375 crore. However, the transfer of ownership is still pending owing to a legal tussle between JKC and the lenders on the fulfilment of preconditions.

Go First, formerly backed by the Wadia Group, had filed for insolvency on 2 May 2023 and suspended flights with effect from 3 May.

Unavailability of new engines and shortage of serviced engines had forced it to ground 30-50% of its fleet on average since 2020, due to which its financial health became unsustainable. The Wadia Group has blamed engine manufacturer Pratt & Whitney for its predicament.