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NEW DELHI/MUMBAI: Go Airlines, founded by billionaire Nusli Wadia, filed for bankruptcy on Tuesday with the low-cost carrier blaming US engine-maker Pratt & Whitney for grounding half of its fleet. Rechristened Go First last May, the airline that started flying in 2005 becomes the first Wadia Group entity to declare bankruptcy in its 287-year history and the third major airline to collapse since 2012 after Kingfisher and Jet.
The bankruptcy application, once admitted by the National Company Law Tribunal Delhi, will see Wadia, his son Ness Wadia, airline chairman Varun Berry and other board members as well as the management cede control to a resolution professional appointed by the forum.
The airline suspended all its flights from Wednesday to Friday (May 3 to 5) amid massive travel demand in India with domestic traffic touching new highs since earlier this year. With an average of 30,000 daily domestic flyers this March, the move may affect about 90,000 people booked to fly Go First.
Even as the DGCA has issued show-cause notice to Go First for suspension of operations for 3 days, it has also sought its “plan of action to operate flights as per approved schedule from May (6), 2023.” Civil aviation minister Jyotiraditya Scindia said “it’s incumbent upon the airline to make alternative travel arrangements for passengers so that inconvenience is minimal”.
On its website, Go First said: “…due to operational reasons, Go First flights scheduled for May 3, 4 and 5, 2023 have been cancelled…. A full refund will be issued to the original mode of payment shortly… committed to providing all the assistance we can.”
The airline, which has 61 aircraft in its fleet, said it moved the NCLT under the Insolvency and Bankruptcy Code (IBC) “due to the ever-increasing number of failing engines supplied by P&W which has resulted in Go First having to ground 25 aircraft (nearly 50% of its Airbus A320neo aircraft fleet) as of May 1, 2023”.
P&W didn’t respond to a request for comment.
Go First, which has been on cash and carry by oil and airport companies, claims the groundings have cost it Rs 10,800 crore in terms of lost revenue and expenses incurred, including Rs 1,600-crore lease rentals paid for grounded planes. Go First has sought Rs 8,000 crore as compensation from PW. If it gets that money, it hopes to “be able to address liabilities of creditors… However at this stage…. no longer in a position to continue to meet financial obligations”.
Minister Scindia said: “Go First has been faced with critical supply chain issues with regard to their engines. The government has been assisting the airline in every possible manner… issue taken up with (P&W)… unfortunate this operational bottleneck has dealt a blow to the airline’s financial position…. It is prudent to wait for the judicial process to run its course.”
Whether Go First flies, and operates how many flights, from May 5 remains to be seen. The DGCA had approved a weekly schedule for 22,907 domestic flights this summer of which Go First was to operate 1,538 flights. Also, will the airline that stares at an uncertain future be able to get fresh bookings, either directly from passengers or from travel agents and portals, will be closely watched. In the past, neither passengers nor travel agents have got refunds from both big and small airlines that got grounded.
The bankruptcy application, once admitted by the National Company Law Tribunal Delhi, will see Wadia, his son Ness Wadia, airline chairman Varun Berry and other board members as well as the management cede control to a resolution professional appointed by the forum.
The airline suspended all its flights from Wednesday to Friday (May 3 to 5) amid massive travel demand in India with domestic traffic touching new highs since earlier this year. With an average of 30,000 daily domestic flyers this March, the move may affect about 90,000 people booked to fly Go First.
Even as the DGCA has issued show-cause notice to Go First for suspension of operations for 3 days, it has also sought its “plan of action to operate flights as per approved schedule from May (6), 2023.” Civil aviation minister Jyotiraditya Scindia said “it’s incumbent upon the airline to make alternative travel arrangements for passengers so that inconvenience is minimal”.
On its website, Go First said: “…due to operational reasons, Go First flights scheduled for May 3, 4 and 5, 2023 have been cancelled…. A full refund will be issued to the original mode of payment shortly… committed to providing all the assistance we can.”
The airline, which has 61 aircraft in its fleet, said it moved the NCLT under the Insolvency and Bankruptcy Code (IBC) “due to the ever-increasing number of failing engines supplied by P&W which has resulted in Go First having to ground 25 aircraft (nearly 50% of its Airbus A320neo aircraft fleet) as of May 1, 2023”.
P&W didn’t respond to a request for comment.
Go First, which has been on cash and carry by oil and airport companies, claims the groundings have cost it Rs 10,800 crore in terms of lost revenue and expenses incurred, including Rs 1,600-crore lease rentals paid for grounded planes. Go First has sought Rs 8,000 crore as compensation from PW. If it gets that money, it hopes to “be able to address liabilities of creditors… However at this stage…. no longer in a position to continue to meet financial obligations”.
Minister Scindia said: “Go First has been faced with critical supply chain issues with regard to their engines. The government has been assisting the airline in every possible manner… issue taken up with (P&W)… unfortunate this operational bottleneck has dealt a blow to the airline’s financial position…. It is prudent to wait for the judicial process to run its course.”
Whether Go First flies, and operates how many flights, from May 5 remains to be seen. The DGCA had approved a weekly schedule for 22,907 domestic flights this summer of which Go First was to operate 1,538 flights. Also, will the airline that stares at an uncertain future be able to get fresh bookings, either directly from passengers or from travel agents and portals, will be closely watched. In the past, neither passengers nor travel agents have got refunds from both big and small airlines that got grounded.
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