Low-Cost Airline Go First Experiences Financial Struggles And Fleet Grounding Due To Engine Delivery Failure


Go First, a low-cost airline, is dealing with several issues right now, including a severe financial crunch, Pratt & Whitney’s failure to deliver engines, and the resultant grounding of a sizable percentage of its fleet. The airline canceled all of its flights until May 12 and stopped selling tickets until May 15; nonetheless, it continued to accept reservations without giving customers their money back.

To cease ticket sales immediately, the Directorate General of Civil Aviation (DGCA) issued a show cause notice to Go First for failing to operate the service in a safe, effective, and dependable manner.

According to a Go First representative, the airline had already stopped accepting reservations before the DGCA sent out the notification to minimize the disturbance to travelers. The airline further asserted that it was making every effort to lessen passengers’ inconvenience. It has 15 days to submit a response to the DGCA notification and will do so when it is appropriate.

Due to a significant cash shortage, Go First applied for voluntary insolvency resolution procedures with the National Company Law Tribunal (NCLT). The lessors of the carrier, on the other hand, were against the request for an interim moratorium because of the “harmful and serious consequences” it would have. The NCLT has not yet issued a decision on the issue.

Additionally, the lessors of the airline have asked for the deregistration of 36 aircraft, or about two-thirds of the total number of Airbus A320s in the Go First fleet. According to Go First CEO Kaushik Khona, as many as 28 aircraft, or more than half of the airline’s fleet, are grounded as a result of Pratt & Whitney’s lack of engine supply. The number of aircraft for which lessors are requesting deregistration has increased from the airline’s initial figure of 23 to 36.

Go First owes creditors a total of Rs 11,463 crore, of which Rs 2,600 crore is owed to aircraft lessors and Rs 3,856 crore is due to operational creditors due to a default. The continuous grounding of a sizable portion of the airline’s fleet exacerbates its financial issues, and its future is still in doubt.

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The cancellation of all flights from May 3 to May 5 was announced by Go First on May 2, 2023, as a result of its application to the NCLT for voluntary insolvency resolution proceedings. The airline asked the two-member bench presided over by tribunal President Ramalingam Sudhakar on May 8, 2023, for an early decision on its appeal.

The subject needs to be listed before the bench led by the president, according to another bench that considered the petition of an operating creditor seeking to initiate bankruptcy proceedings against the carrier.

It is unclear how the airline will overcome these obstacles and get out of its financial dilemma as it comes under increasing pressure from several stakeholders, including the DGCA, lessors, and creditors.

Furthermore, the ongoing global pandemic and the ensuing decline in air travel demand have made Go First’s financial difficulties worse. Due to Pratt & Whitney’s failure to supply the engines, the airline already had to cancel all flights beginning on May 3, 2023, which resulted in the grounding of a major percentage of its fleet. The carrier requested voluntary insolvency resolution procedures as a result, as well as a temporary suspension of its financial obligations.