Go First's revival prospects dwindle amid valuation dispute
The future of the bankrupt airline, Go First, hangs in the balance as disagreements over its valuation continue to obstruct progress. Despite numerous discussions, lenders and potential buyers have failed to reach a consensus. This stalemate has been further complicated by a recent Delhi High Court ruling that allowed lessors to reclaim their aircraft, thereby diminishing the chances of Go First's recovery.
Who are the interested parties?
Among the interested parties in acquiring the beleaguered airline are Ajay Singh, promoter of SpiceJet, and an entity controlled by Nishant Pitti, proprietor of online travel platform EaseMyTrip. Initially, the consortium led by Singh and Pitti proposed ₹1,600 crore and later raised the bid by ₹200 crore. Additionally, a bid has been submitted by Sharjah-based Sky One. However, Go First's committee of creditors (CoC), which includes state-run Central Bank of India and Bank of Baroda, deems these offers too low.
CoC's strategy for reviving Go First depends on lawsuit
The CoC's strategy for reviving the Go First largely depends on financial compensation from a lawsuit against engine manufacturer Pratt & Whitney (P&W). The airline, previously owned by the Wadia group, is currently engaged in a legal dispute at the Singapore Court of Arbitration. It seeks approximately ₹8,000 crore in damages from P&W, blaming its bankruptcy on faulty P&W engines that led to numerous grounded aircraft.
Creditors' committee believes it can recover more money
Banks involved in the lawsuit against P&W are hopeful that any compensation awarded will be sufficient to cover their losses in Go First. An insider told the Economic Times, "The bidders are quoting a price which is far below the expectation of the creditors' committee." The committee believes that if they fight the case themselves, they will recover more money than the bid amount.
Bidders are operating in a 'complete black box'
The Singh-Pitti consortium planned to jumpstart operations by using 15 aircraft from Go First, preserving vital airport slots and international rights. However, as Go First couldn't utilize these slots for two consecutive seasons, they're at risk of expiring. With Delhi High Court permitting lessors to reclaim aircraft, the new owner may lose access to slots and international rights, leaving bidders in uncertainty. "So, the bidders are in a complete black box," an insider told the Economic Times.
