Lenders to Go First and potential bidders have failed to arrive at a valuation for the bankrupt airline despite several rounds of discussions, making liquidation instead of a revival a more likely outcome, people aware of the development said.
A Delhi High Court order on Friday allowing lessors to repossess their aircraft has further dented hopes of reviving Go First, they said.
Ajay Singh, promoter of SpiceJet, and an entity owned by Nishant Pitti-owner of online travel portal EaseMyTrip had jointly bid for the airline. The second bid is from Sharjah-based Sky One.
People involved in the process said Go First’s committee of creditors (CoC) feels that the price offered by the two bidders is too low and their revival plan primarily hinges on monetary compensation from the case against engine maker Pratt & Whitney (P&W).
The committee involves state-run Central Bank of India and Bank of Baroda.
Messages sent to resolution professional Shailendra Ajmera of consultancy firm EY did not elicit any response.
Go First, formerly owned by the Wadia group, is embroiled in a legal battle with P&W at the Singapore Court of Arbitration in which the airline has claimed about Rs 8,000 crore compensation, blaming its bankruptcy to the failure of P&W engines forcing it to ground many aircraft.
People said banks who are fighting the case against P&W believe the compensation will be enough for them to negate their losses in Go First.
“The bidders are quoting a price which is far below the expectation of the creditors’ committee,” one of the persons said. “The committee believes that if they fight the case themselves, they will recover more money than the bid amount.”
The people said the consortium of Singh and Pitti, the favourite to win the bid, has offered Rs 1,600 crore but later agreed to increase it by about Rs 200 crore. The consortium had also offered to pay off employee dues of Go First.
One of the persons involved with the consortium said since data on Go First employees is currently not available, there is a lack of detailed insight about the company.
“Moreover, now that the court has allowed repossession of aircraft by the lessors, there is no certainty that the new owner will have any access to the airline’s slots at airports or its international flying rights. So, the bidders are in a complete black box,” the person said.
Singh-Pitti consortium’s plan hinged on initially using 15 planes of Go First that are in flying condition to start operations for retaining airport slots and international rights.
An airport slot is a permission for take-off and landing at a specific time and date. These are set to lapse as Go First has been unable to use them for two consecutive summer and winter schedules.
Ravi Nath, partner at law firm RNC Legal, who is representing a lessor with exposure to Go First, said the court has directed DGCA to deregister the aircraft within five working days.
“The airports will intimate the lessors about pending dues against the planes in 3 working days. The Ministry of Civil Aviation and DGCA have promised to do the needful,” he said.
