BackGo First insolvency: Lessors have started actions against company to ground, repossess aircraft
Go First says lessors have started actions against the company to ground, repossess aircraft
PremiumGo First says lessors have started actions against the company to ground, repossess aircraft. It owes financial creditors ₹65.21 billion, reported Reuters.
Go First has been incurring net losses in FY20, FY21, FY22, and H1FY23.
The airline's financial troubles may impact its business risk profile, resulting in a loss of market share.
The lenders to Go First include Central Bank of India, Bank of Baroda, Axis Bank, IDBI Bank, and Deutsche Bank. The airline's financial difficulties may impact the lenders' ability to recover their loans.
The company said that it has not defaulted on paying its financial creditors till April 30, however considering the present situation, default to financial creditors ‘would be imminent’ reported Reuters.
The airline's total liabilities to all creditors stand at ₹114.63 billion which includes dues to banks, financial institutions, vendors and aircraft lessors.
"Currently, the assets of the company are not sufficient to meet its liabilities," the airline said in the filing, reported Reuters.
The company has defaulted on payments to operational creditors, including ₹12.02 billion to vendors and ₹26.60 billion to aircraft lessors.
It has received notices from lessors for termination of aircraft lease agreements and some have started actions against the company to ground or repossess aircraft, the filing said.
Six lessors have also invoked letters of credit issued to them by lenders, it said.
Indian low-cost carrier Go First has filed for voluntary insolvency resolution proceedings on Tuesday before the National Company Law Tribunal (NCLT), Delhi. The airline will temporarily halt operations on May 3 and May 4, due to a serious cash shortage, CEO Kaushik Khona of the company informed news agency PTI.
“Go First is facing financial crunch due to non-supply of engines by P&W, that has forced the grounding of 28 planes," he said.
The company, according to Khona, has also requested National Company Law Tribunal (NCLT's) voluntary insolvency resolution procedures.
Speaking to PTI, Khona claimed that the airline had grounded 28 aircraft—more than half of its fleet—due to Pratt & Whitney's (P&W) failure to supply engines. Consequently, there is a financial crisis.
He stated that although the choice to initiate voluntary insolvency resolution procedures was unfortunate, it was necessary to do so in order to safeguard the company's interests.
The airline has informed the government of the events and will also provide a thorough report to the Directorate General of Civil Aviation (DGCA), which oversees aviation safety.
Milestone Alert!Livemint tops charts as the fastest growing news website in the world 🌏 Click here to know more.
