Go First assets see repeated markdowns as liquidation drags on

Reports coming in for today mention that More than three years after Go First stopped flying, the airline’s liquidation is turning into a prolonged exercise in finding buyers, with repeated auction failures forcing down reserve prices across assets ranging from prime real estate to specialised aviation equipment.

The markdowns are not confined to equipment with a limited pool of potential buyers. Even Go First’s 95-acre land parcel in Thane, one of the most valuable assets linked to the grounded airline, has noted its reserve price trimmed sharply.

In July, Moneycontrol noted that the reserve price for the Thane parcel had been reduced by nearly 30 percent to Rs 1,375 crore from Rs 1,965 crore in an earlier auction attempt in June 2024. The property, which stays unsold, has once again been put up for auction in September under the SARFAESI Act.

The struggle to monetise Go First’s assets assumes significance given the scale of its debt. The airline owed around Rs 6,521 crore to financial lenders when it entered insolvency in May 2023. Its overall liabilities were substantially elevated at more than Rs 11,000 crore after including dues to aircraft lessors, vendors and other creditors.

The repeated auctions are now testing how much of that money can ultimately be recovered from assets left behind by the airline.

The same pattern visible in the Thane property is playing out across smaller assets being auctioned by Go First’s liquidator.

Pushback tractors, ground power units (GPUs), step ladders, coaches and cabin catering equipment have all noted their reserve prices revised down across successive e-auction schedules.

For standalone equipment, reserve prices have generally been reduced by around 10 percent between consecutive auction rounds. But for assets that have failed to find buyers through three or four auction announcements, the cumulative markdown has become substantially larger.

Cabin catering trolleys have noted one of the steepest cuts. Their reserve price has fallen to Rs 91.07 lakh from Rs 1.39 crore in the initial stock-exchange debut, a slide of around 34 percent.

Coaches, GPUs and step ladders have each noted cumulative reductions of around 19 percent from their initial reserve prices.

The repeated markdowns underline the difficulty of finding buyers for assets left behind by a defunct airline, particularly equipment with specialised uses and a relatively small universe of potential buyers.

The Thane land is different. Unlike aviation equipment, it is a large parcel of real estate in one of the Mumbai Metropolitan Region’s key property markets.

The parcel could benefit from infrastructure projects including Mumbai Metro Line 4 connecting Wadala and Kasarvadavali, the widening of Ghodbunder Road, the Borivali-Thane twin-tube tunnel and the Gaimukh-Bhayandar bridge and tunnel. These projects are anticipated to improve connectivity across the region and could backing real estate values.

Yet even this asset has struggled to find a buyer despite a substantial reduction in its reserve price.

Lenders are seeking to recover more than Rs 3,918 crore from the Thane property, which was mortgaged as security for Go First’s borrowings. The amount being sought from the property is only part of the airline’s broader debt burden.

A familiar liquidation problem

Go First is not the first failed airline whose assets have required repeated markdowns before finding buyers.

A similar pattern played out during the recovery process involving Vijay Mallya and Kingfisher Airlines.

Kingfisher House, the airline’s former headquarters near Mumbai airport, was initially put up for sale at a reserve price of Rs 150 crore in 2016. It eventually sold on the ninth attempt for Rs 52.25 crore — around 65 percent below the original reserve price.

Kingfisher Villa in Goa additionally underwent a markdown, with the price falling 14.4 percent from Rs 85.29 crore to Rs 73.01 crore before it was sold.

The experience illustrates one of the central problems confronting liquidators: the value assigned to an asset does not necessarily correspond with what a buyer is prepared to pay, particularly when sales are conducted under distressed circumstances.

For Go First’s liquidator, the remaining assets include ground-backing equipment, catering inventory, buses and other items associated with the airline’s operations. Their successive re-stock-exchange debut at softer reserve prices reveals how valuations are being adjusted in an attempt to bring buyers to the table.

Go First filed for voluntary insolvency in May 2023 after grounding its operations. Attempts to revive the airline through the insolvency process subsequently failed, leading to liquidation and the sale of its remaining assets.

The longer that process continues, the more significant the markdowns become. For specialised aviation equipment, a limited buyer pool can make repeated auctions unavoidable. But the inability to sell the Thane land parcel despite a nearly 30 percent reduction reveals that the challenge extends beyond aviation-specific assets.

For lenders owed thousands of crores, the eventual recovery will depend not merely on what Go First’s assets were once valued at, but on what buyers are ultimately willing to pay for them.

A mail sent to Go First’s liquidator seeking comments remained unanswered at the time of publishing.