“We have revised our original plan. We may resume flight operations with 10-15 aircraft but go for Higher Interim Financing from the creditors,” one of the two people said on condition of anonymity.

Earlier, the carrier envisaged restarting flight operations with 26 aircraft through an Interim Financing of ₹400-500 crore from its lenders. According to the people cited above, Go First will be better able to navigate the relaunch process if the number of aircraft is lower and the “cash in hand” is higher.

Go First owes at least ₹6,521 crore to financial creditors, including Central Bank of India Ltd, Bank of Baroda Ltd, IDBI Bank Ltd, Axis Bank Ltd, and Deutsche Bank AG. It had also defaulted on payments to its operational creditors, including aircraft lessors.

Pratt & Whitney (P&W), the engine supplier and service provider for Go First, has agreed to provide 4-5 engines and allied services every month after the Singapore International Arbitration Centre (SIAC) directed the US-based aircraft engine maker to do so.

“We (Go First) will get this arbitration award enforced through an appeal at the Delaware court, even though P&W has given us a commitment to supply the aircraft engines and provide us with all the required maintenance services during the flight resumption process,” said the first person.

The two persons said the new plan to access Higher Interim financing from banks is essentially aimed at enabling Go First to handle the relaunch operations with better infrastructure, ensure smooth payment of the fresh lease rentals (to the lessors), and better compensation to the pilots, crew, and other staff.

“We have worked out the maths. Getting back to the sky with a thrust will need more money. This will ensure that we get the best pilots and the staff, prevent any potential resignation, and run flights smoothly with value-added services for the passengers,” said the first person.

“DGCA (Directorate General of Civil Aviation) wants the airline to ensure there are enough pilots. We already have pilots, but as Go First will increase the number of aircraft gradually, more pilots will be needed,” said the second person.

Go First also plans to comfort its lessors with regular monthly lease payments for a longer period through higher interim financing.

The airline and its lessors were engaged in a dispute at the Delhi high court over the inspection of Go First’s grounded fleet, but the two parties have arrived at an amicable agreement, according to the two people.

“Except for 2-3 contracts, all the lease contracts are valid and live. The problem was never about contract expiry. The only issue was that the lessors wanted the first right to inspect all the aircraft and approve their flight resumption. We have agreed to that,” said the first person.

In fact, as part of the latest strategy, Go First may sweeten its offer for the lessors. “We may pay the lessors a certain additional amount over and above the actual fresh rentals to part-repay the earlier dues,” said the second person.

Go First has defaulted on payments to operational creditors, including ₹1,202 crore to vendors and ₹2,660 crore to aircraft lessors.

“The higher interim financing and the potential cash flows will certainly facilitate settlement of dues and getting the low-cost airline back to shape,” said a third person who closely tracks Go First.

According to the first person, Go First’s lenders have informally agreed to extend the higher interim financing, though a formal loan document will be signed only after a meeting of the creditors.

Additionally, according to the two people, the airline is also planning to avail of long-term hybrid-debt financing from global investors for a strategic stake in the airline.

“The strategy behind this is to attempt to avail of a bulk amount of ₹4,000-5,000 crore at one shot from a deep-pocketed, strategic partner who can come as a co-promoter so that the airline can repay most of its dues to the lenders and the lessors and compete against other airlines with an equal footing,” said the second person. However, this may take several weeks.

“This is not a part of the flight resumption plan. This is rather a long-term plan, and the actual negotiations may start after the operations resume. The assets are in good shape, passenger demand is surging, load factor is improving, and the industry as a whole is steadily growing in India. The growth potential is phenomenal. We are open to all types of large suitors. It may be a large global airline company, a private equity giant or a large conglomerate, which may come as a co-promoter individually or through a partnership. The plan is at a nascent stage,” added the second person, while hoping to resume Go First flights from the second week of August.

Emails sent to spokespeople for Go First’s lead creditors, resolution professional, and P&W did not elicit any response till press time.

Updated: 31 Jul 2023, 12:04 AM IST