What Will Be The Future Actions Of ‘Go First’ Airlines After Bankruptcy?
The GoFirst Airline company had to file for bankruptcy due to the faulty engines supplied by US company Pratt & Whitney. Will GoFirst bankrupt or take some stand?
Go First, a low-cost airline in India, has filed for insolvency resolution due to financial difficulties caused by the grounding of half of its fleet, which the company blames on faulty engines provided by US firm Pratt & Whitney.
The airline has canceled flights from May 3 to May 5, and it is uncertain whether operations will resume by May 15, as some reports suggest.
Go First owes Rs 6,521 crore to creditors, including Bank of Baroda, Central Bank of India, ICICI Bank, and Axis Bank.
The airline has asked for various interim directions from the National Company Law Tribunal (NCLT), including restraining lessors from taking back aircraft and the Directorate General of Civil Aviation (DGCA) from taking strict action against the company.
The airline has also requested that the DGCA, Airports Authority of India, and private airport operators should not cancel any departure and parking slots allotted to the company.
Go First wants fuel suppliers to continue supplying for aircraft operations and not suspend the present contractual arrangements.
The airline’s future course of action will depend on deliberations between the creditors, and the NCLT will likely prioritize its case.
Expectations are that the airline’s lenders might look to restructure debt as the promoters have not yet announced any decision to exit the airline.
Reports have indicated that the Wadias, the promoters of the airline, are in discussions to potentially sell a majority stake or completely exit the struggling airline.
The bankruptcy of Go First may lead to consolidation in the industry, which could result in a smoother and healthier aviation sector in India.
However, the uncertain future for thousands of airline employees, rising airfares in the short term, and difficulties for passengers concerning refunds and getting accommodated with other airlines may pose challenges in the aviation sector.
The airline’s net loss rose to Rs 3,600 crore last fiscal from Rs 1,807.8 crore in 2021-22, and its total liabilities to all creditors are Rs 11,463 crore.
So, we can expect that Go First’s future course of action is uncertain for now, and it depends on deliberations between the creditors and the outcome of the NCLT proceedings.
The airline’s lenders might look to restructure debt, and the Wadias may consider selling a majority stake or completely exiting the airline.
The bankruptcy of Go First may lead to consolidation in the industry and pose challenges for thousands of airline employees and passengers concerning refunds and accommodation with other airlines.