Go First Gets Bankruptcy Protection: What It Means For Airline And Its Future

With the NCLT`s decision in Go First`s favour, the airline has got a sigh of relief for the near future; Here`s what the decision means for the airline and its future.

Go First may very well be thanking its lucky stars on Wednesday for the NCLT verdict in its favour amidst financial and operational difficulties. With the admission of Go First's voluntary insolvency resolution plea and the enacted moratorium, the airline is relieved of certain concerns that hinted at a difficult future for the carrier. Here we explain what NCLT's ruling means for the crisis-hit airline.

NCLT's Decision On Go First Insolvency Plea

The voluntary insolvency case submitted by Go Airlines was accepted by the National Company Law Tribunal (NCLT) on Wednesday, and Abhilash Lal was named the Interim Resolution Professional (IRP). Lal's name had been suggested by the airline in its petition for bankruptcy. The Principal Bench of the NCLT in New Delhi also gave the business a moratorium, which also ordered the suspended Board of Directors to assist the IRP.

The NCLT also mandated that the suspended management pay Rs 5 crore for the IRP to cover the immediate costs, which the Committee of Creditors (COC), which will be created soon, will amend. Additionally, it prohibited the corporation from laying off any of its workers.

Protection From Lessors

The NCLT order prevents lessors, who recently requested repossession of the airline's 45 aircraft, from taking them back. The carrier does not need to worry about losing aircraft from its fleet at this time because of the crisis-hit Go First's admittance of a voluntary insolvency resolution petition and the existing moratorium.

Several lessors of Go First have asked the DGCA to deregister a total of 45 aircraft in the last few days in accordance with the Cape Town Convention. According to the rules, the authority in question must comply with the lessor's request within five working days of receiving it.

As per expert in the aviation sector, the lessors began requesting the repossession of Go First planes on May 4, and the five-working-day limit has not yet been met because there were three holiday days (May 5, 6, and 7). In light of this, the NCLT decision has been made, and lessors are no longer permitted to take back the planes, the expert continued.

Go First's Future

With half of the fleet grounded, the carrier's future remains uncertain. In addition, the ongoing suspension of flight ticket bookings until May 19th adds to the concerns of the airline.

According to Go Airlines CEO Kaushik Khona, the business has not yet received the remaining Rs 208 crore of the Rs 1,500 crore authorised under the Emergency Line Credit Guarantee Scheme (ELCGS) needed to resume operations. He claims that the airline needs roughly Rs 17–18 crore per day to run its operations because its trading partners may only supply fuel and other necessities on a cash-and-carry basis.

When the petition is approved, Khona also stated that the airline will be allowed to resume operations and that its aircraft will be in the air in 7 to 8 days.