Go First requests NCLT for interim directions against lessors and DGCA
On Thursday, Go First, owned by the Wadia group, requests several interim measures from the National Company Law Tribunal (NCLT), including preventing lessors from reclaiming planes and the regulator DGCA from taking any negative action against the airline, which is in crisis.
The airline, which has liabilities amounting to Rs 11,463 crore, requested voluntary insolvency resolution proceedings on Tuesday, and the plea will be heard by the Delhi bench of the NCLT on Thursday. Go First has suspended all flights for at least two days beginning on May 3.
In its petition to the NCLT, the budget airline has requested an order to prohibit aircraft lessors from taking any recovery action and to prevent the DGCA and suppliers of essential goods and services from initiating any adverse actions. Additionally, they requested that the DGCA, Airports Authority of India (AAI), and private airport operators not cancel any departure and parking slots allotted to the company.
The airline is requesting that fuel suppliers maintain their current contractual arrangements for aircraft operations and not cease supply.
Go First, which has been operating for over 17 years, has attributed its current situation to the grounding of more than half of its fleet due to Pratt & Whitney’s failure to provide engines.
The company has a total liability of Rs 11,463 crore to all creditors, including Rs 3,856 crore in outstanding payments to operational creditors.
The airline has Rs 2,600 crore in outstanding payments to aircraft lessors, according to its plea before NCLT.
As of April 30, the airline’s debt exposure to financial creditors was Rs 6,521 crore.
In the last fiscal year, the airline’s net loss increased to Rs 3,600 crore from Rs 1,807.8 crore in 2021-22. In 2020-21, the net loss was Rs 1,346.72 crore.
Go First has given the example of Jet Airways to illustrate the consequences of the swift re-possession of planes by lessors, which resulted in a significant reduction of the airline’s asset value.
According to Go First, prior to its insolvency, Jet Airways had a fleet of 112 aircraft. However, following the insolvency triggered against the airline, it was left with only 11 planes. This substantial decrease in the number of aircraft adversely affected its chances of resolution under the IBC.
The term CIRP refers to Corporate Insolvency Resolution Process as defined under the Insolvency and Bankruptcy Code (IBC).
Go First has issued a warning that if it remains unresolved, it could consolidate its position in the market. It is leading to a loss of customers and negative impacts on all stakeholders. The airline currently holds around 8% of the domestic market share. This warning comes at a time when Air India, AirAsia, and SpiceJet are already facing financial difficulties.
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