By India Today Business DeskCash-strapped airline Go First’s hopes of resuming operations seem to be fading fast after it abruptly filed an insolvency plea last week, citing severe financial woes.
The Wadia group-owned airline’s counters at airports across the country continue to be empty as it has been forced to extend flight suspensions – a development that has cast a deeper shadow over its return to the skies.
On Monday, the airline approached the National Company Law Tribunal (NCLT) to urgently pass an order on its insolvency plea, claiming that aircraft lessors’ are pushing hard to take back planes. Reports suggest that lessors of at least 20 aircraft to Go First are looking to reclaim them.
Go First’s lawyers told the NCLT that lessors had moved to reclaim the planes even as the bankruptcy proceedings were ongoing.
This comes just a week after the airline filed for bankruptcy, blaming US aerospace manufacturer Pratt & Whitney’s “faulty” engines for the ground of about half its fleet.
On the other hand, Pratt & Whitney has told the New Delhi bench of the NCLT that Go First’s claim of defective engines causing its demise was “astounding” and is not supported by any evidence.
According to legal documents seen by the news agency Reuters, P&W said Go First has filed because of its “own poor management and events like Covid”.
Also Read | Mapping Go First’s ‘Pratt and Whitney’ grounding problems
Situation worsens for Go First
If Go First loses its remaining fleet of aircraft, it would be a massive blow to the beleaguered airline’s hopes of resuming operations.
While the airline’s chances of resuming operations remain shrouded by uncertainty amid its deepening financial woes, having the aircraft and slots at its disposal would provide a small window of opportunity to navigate through the ongoing crisis.
Even if Go First somehow manages to keep its remaining aircraft and slots, it would still have a hard time resuming operations as it also faces the risk of a mass exodus of existing staff – both flying and non-flying. The airline’s employees are actively seeking job opportunities at rival airlines, as per several media reports.
The airline could also run into legal troubles over pending dues. Go First’s total liabilities stand at over Rs 11,000 crore, of which it owes over Rs 6,000 crore to financial creditors.
It is already struggling to refund customers who had booked tickets with the airline for future travel.
Despite the DGCA’s directive of processing customer refunds, the airline has been struggling to do so and has been diverting customers to travel agents for the same.
Also Read | Go First cancels all flights till May 12
However, prominent travel agents body the Travel Agents Federation of India (TAFI) has indicated that Go First is yet to provide any actual refund for the cancelled tickets to agents’ bank accounts.
In a letter to Go First, TAFI said, “Hundreds of travel agents across the country have placed substantial deposits with your airline in a credit shell to be used for immediate and future bookings and which currently remain unutilized.”
Simply put, the airline has not been giving actual credit to the travel agents to refund customers for cancelled flights. The travel agents’ body said it will not be possible to refund passengers unless actual funds are received from the airline.
It is worth mentioning that Go First had suspended flights till May 12. On average, it was operating nearly 200 flights and roughly carrying 30,000 passengers daily. This number gives an indication of the massive amount of refunds Go First would have to give its passengers as its flights remain cancelled.
Will Go First succeed in resuming operations?
As the situation stands, the possibility of Go First resuming operations in the near future seems bleak as it could lose its aircraft and slots. Without flight operations, it won’t be making any money and its debt obligations will keep getting bigger.
Go First’s situation is worsening with each passing day as it faces the risk of action from all stakeholders – be it lessors, creditors, or DGCA.
The airline could get some breathing space if NCLT accepts its petition, but a full recovery if far from sight, given its deepening financial crisis and mounting debt.
Go First’s crisis is starting to look similar to the financial turbulence that rocked full-service airline Jet Airways before it filed for bankruptcy, and was ultimately grounded in 2019.
It has been three years since Jet Airways’ revival plan was set in motion, but the airline’s is still struggling to overcome multiple roadblocks that have disrupted its second stint.
Will Go First succeed in overcoming hurdles and resuming operations? Only time will tell.
Also Read | Why Go First was forced to cancel flights, file for insolvency
Jakob Auer
Kayleigh Rogahn
Trace Hane