Big relief for Go First as NCLT grants bankruptcy protection
What's the story
Go First, formerly Go Air, has been granted bankruptcy protection by the National Company Law Tribunal (NCLT) on Wednesday after admitting the airline's voluntary insolvency plea. This comes just hours after the ailing airline suspended all flights until May 19. Go First also expressed regret and apologized to passengers for the inconvenience. However, it assured them that they will receive a full refund soon.
Context
Why does this story matter?
Last week, Wadia Group-owned Go First joined the long list of private Indian airlines that filed for bankruptcy voluntarily amid the financial crisis. The airline attributes its downfall to the United States-based aerospace manufacturer Pratt & Whitney (P&W). Lessors of Go First are currently awaiting the outcome of NCLT proceedings on the firm's financial obligations, which may impair the low-cost carrier's ability to fly.
Order
NCLT admitted Go First's insolvency plea
Per ANI, the NCLT has admitted Go First's plea for voluntary insolvency and initiated Corporate Insolvency Resolution Process (CIRP) proceedings. It granted Go First protection under a moratorium from recovery by lessors. The tribunal also appointed Abhilash Lal as the interim resolution professional (IRP) and asked the suspended Board of Directors to cooperate with him and deposit Rs. 5 crore to cover urgent expenses.
Twitter Post
Statement issued by Go First on Twitter
Due to operational reasons, Go First flights until 19th May 2023 are cancelled. We apologise for the inconvenience caused and request customers to visit https://t.co/qRNQ4oQROr for more info. For any queries or concerns, please feel free to contact us. pic.twitter.com/T1WktKJIuZ
— GO FIRST (@GoFirstairways) May 10, 2023
Statement
Go First claims it'll resume bookings soon
While assuring that a full refund will be paid to the passengers on the canceled tickets, Go First said it was committed to providing all the assistance it can and resuming bookings shortly. "Kindly contact our Customer Care Centre on 1800 2100 999 or write to us at feedback@flygofirst.com to let us know how we can help you," it added.
Crisis
How was the Go First crisis triggered
On Monday, the airline asked the tribunal to issue orders in its insolvency, claiming that lessors are seizing planes even though the NCLT is handling the matter. Lessors have requested the return of 40 Go First planes after rental payments were overdue. Meanwhile, Go First stated that its financial issue was caused by "faulty" P&W engines, which grounded half its 54 Airbus A320neos.
Reaction
'Historic' decision by NCLT hopes to revive airline
In a statement, the NCLT said an IRP will take over management of the airline with immediate effect and ordered a moratorium on Go First's assets and leases. Go First's Chief Executive Officer, Kaushik Khona termed the decision "historic." He said this was the first time an Indian airline has voluntarily sought bankruptcy protection to renegotiate contracts and debt.