‘Too Hypothetical Question’: Go First CEO Kaushik Khona On Rival Bids To Acquire The Airline

Even as the Wadia Group has voluntarily approached the National Company Law Tribunal (NCLT) to seek protection from taking back its leased planes, there is a risk of other interested groups bidding for Go Airlines (India) Ltd. Yes, said the Supreme Court lawyer. “There is always a risk of another interested group making a bid for Go Airlines which may be attractive to the creditors. Go Airlines may have voluntarily gone to the NCLT with the intention of retaining its assets, but rival bids The risk of confrontation remains.” Promoters’ heads are like Damocles’ sword,” D. Varadarajan, a Supreme Court advocate specializing in corporate laws, told IANS.

He said that the objective of NCLT is to resolve the issues expeditiously. Asked about the firewall that the promoters have built Go Airlines against rival bids before landing in the NCLT, Kaushik Khona, chief executive officer, told IANS in an interview, “NCLT and the procedure of IBC (The Insolvency and Bankruptcy Code) will be followed after the application is accepted.The question to be addressed (takeover bid) is hypothetical.

Khona said the promoters of the airline – the Wadia Group – are interested in the business and the objective of approaching the NCLT is to retain the aircraft as the lessors are taking action to get them back. He also said that re-bidding for the airlines was not thought of by the promoters while going to NCLT. Bankruptcy petition is not an excuse to write off the debt.

Khona said, “We have not asked the banks to take any cut (write off a part of their loan).” According to reports, the total liability of the airline – due to banks, other creditors, vendors etc – 11,463 crore approximately.

State-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 Government of India-guaranteed emergency line of credit.

The airlines have defaulted on payment dues to aircraft lessors and others, but not banks, and the account has not been classified as a non-performing asset (NPA) by bankers. With around 50 per cent of its A320neo fleet grounded, India’s third largest airline Go Airlines 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 failed engines supplied by Pratt & Whitney’s International Aero Engines, LLC, which has resulted in GO FIRST (airline brand) being forced to ground 25 aircraft.” (equivalent to approximately 50 percent of its Airbus A320neo aircraft fleet by May 1, 2023).

The petition for admission is being heard by the NCLT. According to Khona, if the petition is accepted by the NCLT, there will be a stay and the appointment of an interim resolution professional (IRP) will happen automatically. In its petition, Go Airlines has suggested the name of a person to be appointed as IRP and Khona said it is for the NCLT to decide.

Khona also said that inquiries had been made for the airline to lease more aircraft. He said that after the petition is accepted, the planes will fly in the air in 7/8 days. Citing FY23 revenue of around Rs 7,100 crore, Khona said the airline was able to clock such revenue even with a lower fleet size.

“We want more aircraft on wet lease or dry lease,” he said. In its petition, Go Airlines has suggested the name of a person to be appointed as IRP and Khona said it is for the NCLT to decide. As for funds to restart operations, Khona said the airline is yet to draw the balance amount of Rs 208 crore out of the Rs 1,500 crore sanctioned under the Emergency Line Credit Guarantee Scheme (ELCGS).

According to Khona, airlines require around Rs 17-18 crore per day for their operations as business partners can provide essential items – fuel and others – on cash and carry basis. Asked about the availability of pilots to fly the aircraft, as many have started attending interviews conducted by rivals, Khona said: “I have pilots to fly all 54 aircraft. We have pilots.” There’s a big fleet.”

Khona said that most of the pilots have not left the company even during the period of Kovid-19 and added that it takes about six months for a pilot to fly an aircraft after joining a rival. He agreed that the salaries of the ground staff have been paid while those of professionals and others for April are pending.

Khona does not want to think about the possibility of NCLT not accepting the insolvency plea as IBC wants every business to be up and running and in the case of airlines up and flying.

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