Go First Airline Insolvency Update: DGCA Bars Ticket Sales, Lessors To Deregister 36 Planes

Go First Airline, on May 2, filed an application for voluntary insolvency resolution proceedings with NCLT, following a severe cash crunch.

Image: ANI

Go First, the low cost airline is facing multiple headwinds as aviation regulator DGCA directed the cash-starved airline to immediately stop ticket sales. On the other hand, the lessors of the Go First are seeking the deregistration of another 13 planes, apart from 23 planes which were earlier in the discussion, taking the total tally to 36 planes, almost 2/3rd the size of the entire Go First fleet of Airbus A320 planes. On the other hand, NCLT is yet to give its ruling on the voluntary insolvency resolution proceedings plea. Go First, last week, filed an application for voluntary insolvency resolution proceedings with NCLT, following a severe cash crunch. Here's the latest updates from the Go First Bankruptcy:

Go First Airline: NCLT Case

Go First, on May 2, 2023, announced to cancel all the flights from May 3 to May 5 following an application they filed by the National Company Law Tribunal (NCLT) for voluntary insolvency resolution proceedings. On May 8, 2023, Go First requested NCLT for an early decision on its plea before the two-member bench headed by tribunal President Ramalingam Sudhakar.

Another bench, which heard the petition of an operational creditor SS Associates Services Pvt Ltd seeking insolvency proceedings against the carrier said the matter needs to be listed before the bench headed by the president, reported PTI.

Go First Airline: DGCA Bans Ticket Sales

The low cost airline, has been extended its flight cancellations, with latest timeline of May 12, 2023. However, the bookings are closed till May 15, 2023 only. As Go First continues to take bookings, without refunding the previous amount to the travellers, Directorate General of Civil Aviation (DGCA) has directed the carrier to immediately stop bookings and sale of tickets till further orders.

As uncertainties rise over the future of the no-frills airline, the aviation regulator also issued a show cause notice to the budget carrier under the relevant provisions of the Aircraft Rules, 1937, for its failure to continue the operation of the service in a safe, efficient and reliable manner, the source said.  The DGCA has asked the airline to submit its reply within 15 days of the receipt of the show cause notice.

Go First Airline: Lessors Seek Deregistration of Planes

In a setback to the ailing airline, aviation lessors have so far sought the deregistration of 36 planes of Go First. As many as 28 planes or more than half of the airline's fleet are grounded due to non-supply of engines by Pratt & Whitney (P&W), the airline's chief Kaushik Khona said on May 2. While airline said lessors were seeking deregistration of 23 planes, the tally now rises to 38 planes. 

Go First Airline: Financial Crunch

The carrier has total liabilities of Rs 11,463 crore to all creditors, including a default of Rs 3,856 crore towards operational creditors. The dues towards aircraft lessors are Rs 2,600 crore. The lessors of the carrier have opposed Go First's plea for an interim moratorium contending that it would have "harmful and serious consequences".