Naveen Jindal-led Jindal Power will not go ahead with its bid to take over low-cost carrier Go First, leaving the future of the grounded airline uncertain amid calls for its liquidation. The deadline to submit the bids ended on Tuesday.
Jindal Power and Jettwings Airways, a northeast-based low-cost regional airline, were the only bidders, and had put in expressions of interest (EoIs) for Go First in October. The Wadia group, founders of Go First (formerly Go Air), chose to sit out of the EoI process though they were allowed to participate.
While Jindal Power spokesperson declined to comment when contacted, a Jettwings Aviation spokesperson remained unreachable for comments at the time of going to press.
The reluctance from Jindal Power follows the clarification from the Directorate General of Civil Aviation (DGCA) in early November stating that aircraft and engines leased can be deregistered and returned to their lessors exempting them from moratorium under the Insolvency and Bankruptcy Code (IBC).
In July, the DGCA said that it had received applications from lessors for deregistration of the entire fleet of Go First comprising 54 aircraft.
Go First lenders led by Central Bank of India, Bank of Baroda, IDBI Bank and Deutsche Bank were hinging their hopes on Jindal Power after extending the insolvency resolution timeline of Go First by an additional 90 days in early November.
Central Bank of India, with an exposure of around 2,000 crore to Go First, declared the account a non-performing asset (NPA) in October. Bank of Baroda, which has an exposure of 1,200 crore, followed suit to declare its loans as NPA.
The beleaguered airline, which stopped flying on May 3, is undergoing an insolvency resolution process under the IBC. It owes 6,521 crore to its lenders. The airline is now staring at a potential liquidation given the lack of interest from any potential suitors.
Bankers speaking to FE on the condition of anonymity said that they were expecting to recover around 25-30% or 1,600-1,900 crore of their exposure. This will come primarily from the parcel of land in Thane that the Wadia group had given as collateral to the banks.
The Wadias claimed to have injected 6,500 crore into the embattled airline since inception in 2005, including 3,200 crore in the last three years. Go First has received over 20,000 crore in claims from operational and financial creditors.
(with inputs from Rajesh Kurup)
