Three entities – Sharjah-based aviation company Sky One, Africa-focused Safrik Investments and local airline SpiceJet – have shown interest in acquiring bankrupt carrier Go First, in an unexpected development weeks after the deadline for making proposals passed and as lenders were considering its liquidation.
Shailendra Ajmera, the resolution professional (RP) managing Go First’s corporate insolvency resolution process (CIRP), received requests from these entities for conducting due diligence of the grounded airline during the past 10 days, people familiar with the matter said. All of them have also sought an extension of the deadline, they said.
“The committee of creditors will now meet to decide if an extension can be granted,” one of the people said.
Ajmera did not reply to an email seeking comment. Emails sent to SpiceJet, Sky One and Safrik also did not elicit any response till press time Sunday. Lenders have been contemplating liquidation of the airline after they did not receive any bids till November 22, the last date for the submission of bids, ET had reported.
Lenders and the RP expect a better recovery from the airline’s ongoing arbitration proceedings in Singapore against US-based engine maker Pratt & Whitney (P&W), than selling it. Lenders have continued the arbitration started by Go First’s erstwhile management, seeking more than $1 billion from P&W, blaming it of supplying faulty engines that were not replaced on time, resulting in the grounding of half the airline’s fleet and leading it to bankruptcy.
Discussing growth, challenges, and opportunities during a fireside chat in ET Travel & Tourism Conclave, Akasa Air’s CCO & Co Founder, Praveen Iyer emphasised leveraging the nation’s top-tier service and potential. He said that despite pandemic induced slowdown, India’s aviation sector rebounded with record passengers. Iyer underscored infrastructure and tech advancements as pivotal tools while also sharing Akasa’s growth story and international expansion plans on the sidelines.
“Go First operated entirely on P&W engines while its competitors had a mix of P&W and CFM engines, and that impacted and grounded 50% of its aircraft. P&W is legally and morally obligated to adhere to the arbitration laws,” said an executive close to the development.Lenders are also cautious about the new interests because they are unsure about the financial capabilities of the three entities.
“The two foreign investors are little known. The African company is just an investor with not much known about its net worth. Though the Sharjah-based company claims it has done some work in cargo, leasing and aircraft maintenance, it is unlikely they have the financial wherewithal,” said a second person aware of the process. “Previous experiences suggest that these types of companies inflate their net worth and fail to back their claims with cash. So, it is not wise to expect anything out of these interests,” this person added.
SpiceJet, being a local airline with expertise in this sector, has to be considered a serious contender. But the airline’s struggle for its own survival has made bankers sceptical.
“SpiceJet has been struggling for some time now, so one has to take its interest with scepticism. Though they are raising money, it is more for their own survival,” the second person said, asking: “How can an airline which itself is on crutches revive one which is almost dead?”
Last week, the board of SpiceJet approved a proposal to raise more than Rs 2,250 crore through an issue of shares to financial institutions, wealthy individuals and other private investors.
