Go First Seeks Out NCLT For Directions To Deal With The Crisis

Debt-ridden, Go First Airways seeks out National Company Law Tribunal (NCLT) for various interim directions to deal with the ongoing crisis. It has asked for help to restrain lessors from taking back aircraft and the regulator Directorate General of Civil Aviation (DGCA) from taking any adverse action against the airline.

Wadia group-owned airline, which has liabilities worth Rs 11,463 crore, in its plea for voluntary insolvency proceedings, asked NCLT to intervene and is set to be heard by the Delhi bench of the NCLT on Thursday.

The low-cost airline canceled all its flights on May 2 for three days, from May 3 till 5. Later DGCA issued a show cause notice for it. "Go First is hereby called upon to show cause as to why suitable action shall not be initiated against the airline for the aforesaid violation. The reply of the airline shall reach this office within 24 hours, failing which the matter would be processed ex-parte," DGCA said in the statement.

Even the financial creditors and suppliers of essential goods and services had started to take action by taking control of the aircraft to recover their losses.

Another plea is that the DGCA, Airports Authority of India (AAI), and private airport operators should not cancel any departure and parking slots allotted to the company. The airline also wants fuel suppliers to continue supplying for aircraft operations and not terminate the present contractual arrangements.

Go First, which started flying more than 17 years ago, has said the non-supply of engines by Pratt & Whitney resulting in the grounding of more than half of its fleet has led to the current situation. The carrier has total liabilities of Rs 11,463 crore to all creditors, including a default of Rs 3,856 crore towards operational creditors.

The dues towards aircraft lessors stand at Rs 2,600 crore combined, according to the plea filed before NCLT. As on April 30, the debt exposure towards financial creditors stood at Rs 6,521 crore. The airline's net loss rose to Rs 3,600 crore last fiscal from Rs 1,807.8 crore in 2021-22. The net loss was Rs 1,346.72 crore in 2020-21.

Further, Go First has cited the example of Jet Airways, saying that lessors took swift re-possession of the planes leading to serious depletion of its asset value. Citing Jet Airways, the Wadia group firm said before insolvency, it had a fleet size of 112 aircraft.

However, after the insolvency was triggered against Jet Airways, it was left with only 11 aircraft, which significantly affected its prospects of resolution under IBC, said Go First.

CIRP refers to Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code (IBC). Go First has a domestic market share of around 8 per cent. With Air India, AirAsia, and SpiceJet already reeling under financial stress, if Go First is not resolved, then it will further monopolise the market leading to loss of consumers and all the stakeholders, it said.