Facing turbulent times, can Go First take off again
What's the story
Wadia Group-owned Go First filed for voluntary insolvency last week amid a dire cash flow crisis.
The troubled airline also grounded its aircraft as it awaits the decision of the National Company Law Tribunal (NCLT).
Now, questions have been raised about the chances of Go First taking off again. Let's see whether the ultra-low-cost carrier can get back to the skies.
Context
Why does this story matter?
Last week, Go First, previously known as Go Air, became one of the many private Indian airlines to go down the bankruptcy route.
The airline blames US-based Pratt & Whitney (P&W) for its downfall. Lessors of Go First are now awaiting the decision of the NCLT regarding the company's financial liabilities.
The decision may have implications for the low-cost carrier's ability to fly.
Can they?
Go First can fly if lessors don't take aircraft
Go First's survival will depend on the NCLT's ruling, said CEO Kaushik Khona. According to him, the company has enough funds to go on in a cash-and-carry model for about 10 days.
However, that will hang on the bankruptcy court restraining lessors from taking back possession of its aircraft. Go First has sought a moratorium on that and creditors cashing guarantees from the NCLT.
Immediate
Tribunal has to start insolvency process 'immediately': Khona
Khona said they "will 100% be able to save the airline." However, he believes the tribunal has to "immediately" start the insolvency process to make that happen.
"All our stakeholders, including oil suppliers and service providers, are aligned to the fact that we have been continuously cooperating and transparent with them," the CEO added.
Proceeding
NCLT reserved Go First's plea for final orders
The NCLT heard Go First's plea on Thursday but reserved it for final orders. On Monday, it is set to hear two insolvency petitions against the airline.
The petitions were filed by SS Associates Service Pvt. Ltd., which provided transport services to Go First, and by a pilot claiming his dues.
The airline's total liabilities to all creditors stand at around Rs. 11,460 crore.
Not immediate
Go First's chances of flying again depend on NCLT
If the NCLT fails to come up with an immediate solution, Go First will be in trouble. A cash-and-carry model is not sustainable, and the company knows it.
Its creditors are getting restless as time passes. That's why it needs the NCLT to stop creditors and the DGCA from taking any adverse actions.
Go First's chances of flying again depend entirely on NCLT orders.
What happened?
Go First grounded over half of its Airbus A320neo fleet
Go First's recent troubles are connected to the airline grounding over half of its Airbus A320neo fleet.
The carrier blamed the fastly degrading combustor of Pratt & Whitney engines for its troubles. The engine manufacturer, however, said Go First has a "lengthy history of missing its financial obligations."
The airline has filed a suit against P&W in Delaware over the non-supply of engines.