In a huge relief to Wadia group-led Go First Airline, the Delhi bench of the National Company Law Tribunal (NCLT) has admitted the airline's plea for voluntary insolvency and has granted protection under moratorium from the recovery of its planes by foreign lessors.
The tribunal has also ordered the initiation of a Corporate Insolvency Resolution Process (CIRP) and the appointment of a resolution professional, who will maintain the airline's status as a "going concern". Further, the airline is mandated to deposit ₹5 crore with the resolution professional to meet the expenses.
Go First, meanwhile, has informed that it has cancelled all its flights untill May 19, 2023, due to operational reasons. "We apologise for the inconvenience caused and request customers to visit https://bit.ly/42ab9la for more info. For any queries or concerns, please feel free to contact us," the airline said.
Nusli Wadia-controlled Go First airline had earlier sought voluntary insolvency proceedings and the imposition of an interim moratorium under the Insolvency and Bankruptcy Code (IBC).
On May 4, the NCLT reserved its order on the matter. As the airline’s insolvency plea is admitted today, a resolution professional will be tasked to revive the Wadia Group airline.
The NCLT order will now also decide the fate of around 7,000 Go First employees and will have implications on foreign lessors, which have filed requests with India's aviation regulator DGCA (Directorate General of Civil Aviation) to deregister 45 of total of 55 Go First Airways planes.
These Airbus jets include A320neo airplanes that are powered by Pratt & Whitney engines.
GY Aviation, Pembroke Aircraft, Narmada Aviation Leasing, Yamuna Aviation Leasing, and SMBC Aviation, among others, have leased aircraft to Go First. All the lessors are based out of Ireland.
Go First claims it was forced to apply to the NCLT after Pratt & Whitney, the engine supplier for Go First’s Airbus A320neo aircraft fleet, refused to comply with an award issued by an emergency arbitrator.
The order had directed Pratt & Whitney to release and dispatch without delay at least 10 serviceable spare leased engines to Go First by April 27, 2023, and a further 10 spare leased engines per month until December 2023.
Notably, the airlines are mandated to give backplanes if they default on a payment to lessors under the Cape Town Convention treaty.
Go First had earlier asked the National Company Law Tribunal (NCLT) to urgently pass an order on its insolvency resolution plea, citing likely repossession of aircraft by the cash-strapped carrier’s lessors.
Lawyers representing Go First told the tribunal that lessors are trying to repossess the planes, which could further impair its operations, thereby affecting several employees and other people associated with it.
The airline, meanwhile, has cancelled all its scheduled flights till May 12, 2023, citing ‘operational reasons’. The airline also suspended the sale of flight tickets till May 15. The aviation regulator had also told the airline to process refunds for cancelled flights to passengers.
The national association of the travel and tourism companies in India, the Travel Agents Association of India (TAAI), which has around 2,500 companies as its members, has given a representation to the government, saying funds worth ₹900 crore are stuck with Go First in the form of advances and forward bookings. The body has sought immediate help from the government to recover their funds.
The beleaguered carrier commanded a market share of 7.8% in the January-March quarter and flew 29.11 lakh passengers in the first three months of 2023, as per DGCA data.