The lenders of cash-strapped airline Go First have decided to proceed with interim funding for the company after the aviation regulator gave a green signal to the airline to resume operations, multiple people aware of the development told CNBC-TV18.
The airline's lenders are now seeking individual board approvals to release interim funding for the company, said people in the know. This move comes after the Directorate General of Civil Aviation (DGCA) gave its green light for the airline to resume operations, albeit with certain conditions.
Following a crucial meeting held today, the lenders unanimously decided to proceed with the financing, signalling a ray of hope for the cash-strapped airline, CNBC-TV18 has learnt. It should be noted that the lenders had previously given an in-principle nod for approximately Rs 450 crore in interim financing for Go First, last month. However, the final decision on releasing the funds was contingent upon the DGCA's clearance, which has now been obtained.
The interim funding assumes utmost importance for Go First as it will enable the airline to resume operations, which have been severely impacted by the economic downturn and the unprecedented challenges posed by the COVID-19 pandemic.
Sources close to the matter have indicated that a substantial portion of the financing is expected to come from two key lenders, namely Bank of Baroda and Central Bank of India. Both institutions have expressed their commitment to supporting the airline during these difficult times.
However, one notable absentee in providing further financing is Deutsche Bank, which is unlikely to extend any additional support to Go First. This development might put added pressure on other lenders and the airline's management to secure alternative sources of funding.
Go First, formerly known as GoAir, has been grappling with financial difficulties, which led to its admission into the Insolvency and Bankruptcy Code (IBC) on May 10. The airline has outstanding debts amounting to Rs 6,521 crore, owed to various banks including Central Bank of India, Bank of Baroda, Deutsche Bank, and IDBI Bank.
GoFirst, one of the major players in the Indian aviation industry, has faced stiff competition and market challenges in recent years. The cash-strapped airline filed for bankruptcy, blaming ‘faulty’ Pratt & Whitney engines which led to the grounding of half its fleet, and revenue hit.
As part of the ongoing financial restructuring efforts, Go First had cancelled all its flights until July 23. This temporary halt in operations is aimed at minimising costs and conserving resources while the airline works towards resolving its financial woes.
(Edited by : Anand Singha)
Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!
BJP is planning to ban RSS, says Shiv Sena (UBT) chief Uddhav Thackeray
May 18, 2024 8:01 PM
Punjab Lok Sabha elections: Complete list of Congress candidates
May 18, 2024 4:08 PM
Punjab Lok Sabha elections: Check full list of AAP candidates and constituencies
May 18, 2024 12:59 PM
PM Modi, Rahul Gandhi election rallies in Delhi today: Here are the routes to avoid
May 18, 2024 11:28 AM