The big name of the aviation sector and the Go First airline of the Wadia Group has started the process of declaring itself bankrupt. Due to the increasing losses, the company has taken this decision. The company's CEO Kaushik Khona told PTI that the company has grounded its 28 flights.
The company has also filed an application for Voluntary Insolvency Resolution Proceedings before the National Company Law Tribunal. The airline's CEO Khona said that Pratt & Whitney did not supply the engine, due to which they had to ground 28 of their aircraft and a fund crisis arose. The airline has informed the government about the developments and DGCA will also submit a detail report.
Earlier this morning news came that GoFirst airline has canceled its flights on 3rd and 4th May due to non-payment of dues to petroleum companies. The airline is facing severe cash crunch. Apart from this, the company had to ground more than half of the aircraft due to frequent issues and supply of Pratt & Whitney engines. These engines supply power to the Airbus A320 Neo aircraft.
This airline of Wadia Group is looking for a strategic investor and is in talks with potential investors. According to an official of the oil marketing company, the airline is on cash and carry mode, which means it has to make daily payments for the number of flights it operates. It has been agreed that if the payment is not made, the vendor can stop the business. It is clear that it is also going towards the same track which Kingfisher once went. No official statement has come out in this matter from Go First.
Case filed against engine maker
In addition, GoFirst Airline has filed a lawsuit against the US-based engine maker in Delaware Federal Court, seeking enforcement of an arbitration court award it won against Pratt & Whitney. In this decision, it was said that Pratt & Whitney would have to provide engines to the airline company. If the company does not do this then there is a danger of closure of the airline. The decision of March 30 said that if emergency engines are not made available, GoFirst may have to suffer huge losses, which are difficult to recover.
Airline summer plans
According to the information, GoFirst had 30 planes grounded till March 31, out of which lease payment is outstanding on 9 planes. According to the airline's website, GoFirst has a total of 61 aircraft in its fleet, of which 56 are A320 Neo and 5 are A320CEO. The loss of passenger revenue occurs when there is an increase in the air fare. Air traffic is continuously increasing after the epidemic. The airline plans to operate 1,538 flights a week in its current summer schedule, which is 40 fewer than last year. The season started on 26 March and will run till 28 October.
Decreased market share
GoFirst's market share has declined since July 2022, when it had to ground its aircraft for the first time. The market share narrowed to 8 per cent in February carrying 963,000 passengers from a high of 11.1 per cent in May 2022 while carrying 1.27 million passengers. The fall in the number of passengers has affected the financial condition of GoFirst. According to regulatory filings, the airline reported a net loss of $218 million in FY2023. This was double the previous year's loss of $105 million.
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