Domestic budget carrier Go First on Tuesday, May 2, 2023, announced that it has filed an application for voluntary insolvency resolution proceedings before NCLT
The announcement was made by the airline’s CEO Kaushik Khona. It came shortly after Wadia Group-owned Go First said it will temporarily suspend flight operations on May 3, 4 due to a severe fund crunch
Go First is facing financial crunch due to non-supply of engines by P&W, which has forced the carrier to ground 28 aircraft. The airline is looking for an investor to resume domestic operations, Go First told BT TV
Go First Airlines informed DGCA that all its flights will remain cancelled on May 3, 4. Once the NCLT admits the application, then the flights will be restarted, Khona said
Go First commanded a market share of 8.9% in CY22 and sudden disruption in operations is likely to benefit other players and raise airfares due to supply constraints, according to Jinesh Joshi – Research Analyst, Prabhudas Lilladher Pvt Ltd.
Over 50% of Go First’s aircraft are grounded because of engine issues. The carrier will be submitting a detailed report to the aviation regulator DGCA
The Wadia group-owned Go First has more than 5,000 employees. Filing for voluntary insolvency resolution proceedings is an unfortunate decision, but it had to be done to protect the interests of the company, Khona said
Go First has been struggling to raise funds in recent weeks after posting its biggest annual loss in FY22. Its dire financial condition has been worsened by operational issues in the wake of supply chain disruptions related to the Pratt & Whitney jet engines that power its planes
Wadia Group is reportedly in talks to either sell a majority stake or to exit the shareholding entirely. Meanwhile, the airline has sued Pratt & Whitney in a US federal court to make the company supply the engines to Go First
Last month, Go First denied rumours it would exit the aviation business. A senior airline official told that there were no plans to shed stake or exit the business, and that the promoters were "committed to the business and are infusing further funds"
Go First is the second airline debacle in India in recent years. Earlier, financial losses resulted in Jet Airways' bankruptcy. On April 5,2019, Indian Oil Corporation stopped supplying fuel to the airline, citing non-payment of dues
On Friday, Sanjiv Kapoor, the CEO-designated of Jet Airways had resigned at a time when the grounded airline was struggling to take off with new owners taking longer than thought to deal with lenders