PremiumGo First Airlines, which filed for bankruptcy on Tuesday, announced that its flight operations will remain cancelled from May 3 to May 5 adding that a full refund will be issued to the passengers. However, some reports suggest that flight operations may remain suspended till May 15.
The Wadia group-owned carrier has also moved the National Company Law Tribunal, seeking voluntary insolvency resolution proceedings.
"Go First is facing financial crunch due to non-supply of engines by US-based jet engines manufacturer Pratt and Whitney (P&W) that has forced grounding more than 50 planes," a Go First official told ANI.
Here are the latest updates:
“We regret to inform that due to operational reasons , Go First flights scheduled till 12th May 2023 have been cancelled. We apologise for the inconvenience caused by the flight cancellations. A full refund will be issued to the original mode of payment shortly," the company wrote.
Air India may hire Go First cabin and cockpit crew as it undertakes a mega expansion. The Tata Group-led carrier had recently placed a historic order for about 500 aircrafts and it will need crew for the operations.
Indian airline Go First's effort to start insolvency proceedings has become ensnared in a tussle with aircraft lessors after they asked the aviation regulator to deregister some of its planes as a step towards taking them back.
India's first major airline collapse since 2019 underlines the fierce competition in a sector dominated by IndiGo and the recent merger of Air India and Vistara under the Tata conglomerate.
Some lessors opposed Go Airlines (India) Ltd's plea at the first hearing of the National Company Law Tribunal (NCLT) on Thursday, after the airline had blamed "faulty" Pratt & Whitney engines this week for the grounding of about half of its fleet.
The cash-strapped airline wants the tribunal to accept its plea and is seeking an interim moratorium to save its assets, a move the lessors oppose, a Reuters report said.
The Wadia Group, which owns the struggling airline Go First, is expected to request a settlement with banks that would involve creditors accepting a significant reduction in the amount owed, The Financial Express has reported.
According to legal experts cited in a May 4 report, as the company has not defaulted, it will be permitted to propose a resolution plan following the commencement of insolvency proceedings at the National Company Law Tribunal (NCLT). Read here
Aircraft lessors on Thursday vehemently opposed cash-strapped Go First's urgent plea for voluntary insolvency resolution proceedings and a moratorium on the financial obligations during the hearing before the National Company Law Tribunal (NCLT), which reserved its order.
Amid the airline facing severe financial crunch and cancelling flights, a two-member NCLT bench comprising President Justice Ramalingam Sudhakar and Member L N Gupta heard the arguments for and against the petition for nearly four hours.
As aircraft lessors opposed the plea, the counsels for Go First said the petition was not a malicious one to avoid payment of dues to its creditors but to save the company.
Dozens of pilots, many from crisis-hit Go First, flocked to a Tata group hotel near Delhi on Thursday for walk-in interviews with the conglomerate's Air India airline.
“It is very disheartening, the airline was functioning as if everything was normal. We have to jump ship in order to keep our flying licences current," said a pilot who joined Go First two years ago and was waiting in a long line at Tata's Taj Hotel.
"It happens when there is a mismatch of supply and demand affairs. Prices will go up but it settles quite nicely. It has been seen the last time when an airline went down, there was a temporary period of mismatch and then, capacity came into the system and fares were back to normal," Ajay Singh said during an interaction with media at the India Tourism Conference 2023.
Aircraft lessors on Thursday opposed the airline's request to the NCLT, saying that insolvency proceedings cannot be initiated without hearing them.
The National Company Law Tribunal has reportedly reserved its order on Go First's plea seeking interim moratorium to prevent the seizure of its 26 aircrafts. Go First has filed for bankruptcy and as an interim measure sought moratorium to prevent lessors from taking possession of planes. This was, however, opposed by the lessors representing 26 aircrafts who challenged these proceedings contending that this would jeopardise their contractual obligation, adding that they want their aircrafts back.
The Directorate General of Civil Aviation (DGCA) had issued a show cause notice to the airline after it suddenly decided to cancel flights for three days starting May 3.
"Go First has intimated that they have suspended sale of their flights till 15 May 2023 and are working to refund or reschedule for future dates, the passengers already booked to fly with them," the regulator said in a statement.
Go First informed the Directorate General of Civil Aviation that it has suspended the sale of tickets till May 15. an suspended all flights till May 9.
In a statement, the aviation regulator referred to the showcause notice issued to the airline, and said that Go First had intimated that they have filed an application under section 10 of the Insolvency and Bankruptcy Code before the NCLT.
“They have further intimated that they have temporarily suspended scheduled flight operations for a period of three days effective 3rd May 2023 and shall take further course of action as per the outcome of their application before the NCLT", the DGCA said
Go First has announced that it has cancelled all flights until May 9, 2023, citing operational reasons for the cancellations. Read here
Air India may hire cabin and cockpit crew from Go First, which has reportedly gone bankrupt, as part of its expansion plans after recently placing a large order of 500 aircraft, sources close to the development revealed.
Recently, Air India advertised that the airline will hire more than 1,000 pilots for its fleet with the tagline "Let's fly to new heights, together." Read here
Cash-strapped budget airline Go First has sought an interim moratorium as the Delhi chapter of the National Company Law Tribunal (NCLT) began hearing its voluntary insolvency plea on Thursday. However, NCLT informed the Wadia group-owned airline that there is no scope for an interim moratorium.
The airline's plea for initiation of insolvency proceedings was mentioned before NCLT's Delhi bench-headed by President Justice Ramalingam Sudhakar on Wednesday and the bench agreed to an urgent hearing on Thursday. Read here
With many Go First crew members including pilots scouting for jobs, a member on pilots group tweeted about ‘spot interviews for pilot at Air India’.
She hashtagged it as Go First loss can be Air India's gain
Go First has sought various interim directions from the National Company Law Tribunal, including restraining lessors from taking back aircraft and regulator DGCA from taking any adverse action against the airline.
In its petition filed before NCLT, the budget airline has sought directions to restrain aircraft lessors from taking any recovery action as well as restrain the DGCA and suppliers of essential goods and services from initiating adverse actions.
Another plea is that the DGCA, Airports Authority of India (AAI), and private airport operators should not cancel any departure and parking slots allotted to the company.
The airline also wants fuel suppliers to continue supply for aircraft operations and not terminate the present contractual arrangements.
Go Airlines India Ltd's alleged in its Delaware court filing that new Airbus SE jets were grounded for 17,244 days in the past three years due to engine faults from Pratt & Whitney.
“There have been numerous, persistent, and continuing technical issues with the defective GTF Engines supplied by Pratt," the carrier, which sought insolvency protection this week, said in a filing dated April 28. Pratt has failed to comply with an arbitration order in Singapore that mandated it to supply spare engines and parts to the airline, leading to “a significant risk that Go First will go out of business and be forced to declare bankruptcy," according to the filing
With Go First filiing for bankruptcy on Tuesday, thousands of crew members including pilots are now scouting for jobs in other airlines like Air India and Indigo. Previously similar situation arised when airlines like Kingfisher and Jet Airways crashed
Some passengers who had already booked their tickets complain that the airline is not giving them full refunds as promised. Read here
With Go First flights being suspended at least till tomorrow, airfares are likely to shoot up for the next few days especially on the tourist routes such as from Delhi or Mumbai to places like Leh or Srinagar.
However, air fares for travel between metro cities have not been impacted yet.
Airbus on Wednesday said that U.S. engine maker Pratt & Whitney has been struggling to support its fleet of passenger jets with enough spare parts and engines.
"This being said, there are issues with in-service support of the GTF that are leading to airlines having planes with temporary issues, and planes 'AOG' (grounded), and this is something that we are very closely monitoring," Faury told reporters during a results briefing.
However, CEO Guillaume Faury declined comment on a decision by India's third-largest airline, Go First, to file for bankruptcy, which it blamed on problems with the durability of Pratt & Whitney's GTF engines on its Airbus 320neo jets.
The Central Bank of India reported an outstanding exposure of ₹1,305 crore to financially troubled airline Go First as of March 31.
"...Central Bank of India's outstanding exposure to GO First Airlines as on 31st March 2023 is ₹1,305 crore and additional amount of ₹682 crore sanctioned under Emergency line of credit guaranteed by Government of India," the lender said in a filing to the BSE.
The airline's plea for insolvency proceedings will be heard by the Delhi bench of the National Company Law Tribunal on an urgent basis.
Frustrated passengers who had booked Go First flights complained about the sudden cancellation of flights on Wednesay, with many forced to book new tickets at elevated costs. Experts predict that the fares are likely to go up in sectors served by Go First during the holiday period.
A day after the budget carrier cited grounding of more than half of the fleet due to non-supply of engines by Pratt & Whitney as the reason for its financial crunch, the US-based engine maker on Wednesday said it is complying with the arbitration order regarding the airline and continues to prioritise delivery schedules for all customers.
Indian Oil Corp will recoup $61.14 million of jet fuel sales to cash-strapped Go First by cashing in bank guarantees and is optimistic it will recover a further $6.11 million for unsecured sales made in the past few months.
Read more: Indian Oil to recoup most dues from Go First through bank guarantees: Report
As Go First filed for insolvency, two planes had made headlines after being diverted to Surat airport for unknown reasons. The Mumbai-bound Go First flights reached late on Tuesday night after hours of unusual stoppage. The two flights - one from Srinagar to Mumbai and another from Delhi to Mumbai - had landed at Surat airport on Tuesday evening after it was diverted.
Travel Agents Association of India President Jyoti Mayal has expressed concern over the sudden cancellation of all flights by Go First Airlines on May 3 and 4, stating that it has put the aviation industry in shock. Go First has filed an application for voluntary insolvency resolution proceedings before National Company Law Tribunal.
“The Indian government is very keen we should not fail," Kaushik Khona said.
Several people took to social media on Wednesday amid growing concerns about high re-booking costs. According to Ajay Awtaney, the founder of frequent flier website LiveFromALounge.com, options are rather limited for travellers. People can either rebook on other airlines and pay a fee to cancel their Go First tickets, or they can wait for their flights to be canceled and get a full refund.
“In the short run, I’d expect airfares to go up even further for now given that all airlines are operating at 90% and only the last few seats are available on the plane. It doesn’t look like the airline will be operating anytime shortly," he said.
According to its filing with the NCLT, it owes financial creditors ₹65.21 billion ($798 million), and has now “exhausted all financial resources". The airline's total liabilities to all creditors stand at ₹114.63 billion. This includes dues to banks, financial institutions, vendors and aircraft lessors.
One scheduled airline on an average has gone out of business every year since private airlines took to the skies nearly three decades ago, with Wadia group-owned Go First being the latest carrier battling financial turbulence for survival.
India's Wadia Group, the owner of cash-strapped Go Airlines (India) Ltd, is completely committed to the company, and has no plans to exit it, the airline's chief executive told Reuters on Wednesday.
Flyers of Go First were stranded at Delhi airport on Wednesday as the airline failed to inform passengers about the cancellation of flights. The counters of the budget airline, owned by the Wadia Group, wore a deserted look on Wednesday morning. Passengers flocked to other counters to find fares of other airlines, surged to exorbitant amounts, amid the crisis.
Indian budget carrier Go Airlines (India) Ltd owes financial creditors 65.21 billion rupees ($798 million). The company had not defaulted on any of these dues as of April 30, it said in the bankruptcy filing seen by Reuters.
Go First chief Kaushik Khona has told employees that the airline has been “crippled" by recurring Pratt & Whitney engine troubles and assured that the carrier is doing everything possible to navigate the situation with utmost care and concern for all staff.
According to the airline, the arbitrator ordered P&W to supply at least 10 serviceable spare leased engines by April 27 and a further 10 spare leased engines per month until December 2023.
"With that, the airline would have had all its A320 neo aircraft operational by August/ September 2023... unfortunately, Pratt & Whitney has chosen to defy the order from the Emergency Arbitrator," Khona said.
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