Image for representation purpose only. , Photo credit: The Hindu
distressed go first announced on Thursday that it had canceled flights through May 9 due to operational reasons.
The Directorate General of Civil Aviation (DGCA) said the airline has suspended ticket sales till May 15 and is working to refund or reschedule existing bookings for future dates.
“The total value of the refund is yet to come. 77,000 passengers were affected due to cancellations in the last 30 days,” said Kaushik Khona, CEO, GoFirst Hindu,
The airline was issued a show-cause notice after the DGCA suddenly decided to cancel flights for three days from May 3.
“GoFirst has informed that they have suspended the sale of their flights till May 15, 2023 and are working to refund or reschedule for future dates,” the regulator said in a statement.
After examining the reply filed by GoFirst, the watchdog has issued an order “under the extant rules directing them to process refunds to passengers as per the timelines specifically prescribed in the relevant rules”.
The regulator also said that it is committed to minimize inconvenience to passengers in the wake of GoFirst’s sudden decision to suspend its scheduled operations without any prior notice.
Go first seeks NCLT direction
The airline has sought several interim directions from the National Company Law Tribunal, including restraining the lessors from taking back the aircraft and restraining regulator DGCA from taking any adverse action against the airline.
The Wadia Group-owned airline, which has a liability of Rs 11,463 crore, has sought voluntary insolvency resolution proceedings and the plea is scheduled to be heard by the Delhi bench of the NCLT on Thursday.
In its petition filed before the NCLT, the budget airline has sought directions to restrain the aircraft lessors from taking any recovery action as well as restrain the DGCA and suppliers of essential goods and services from initiating adverse action.
Another argument is that the DGCA, Airports Authority of India (AAI) and private airport operators should not cancel any departure and parking slots allotted to the company.
The airline also wants fuel suppliers to continue to supply for aircraft operations and not terminate the current contractual arrangements.
Go First, which began flying more than 17 years ago, has said the grounding of more than half of its fleet as a result of Pratt & Whitney not supplying engines has led to the current situation.
The carrier has a total liability of Rs 11,463 crore to all creditors, including a default of Rs 3,856 crore towards operational creditors.
Aircraft lessors owe Rs 2,600 crore filed a petition before the NCLT,
As on 30 April, the credit exposure to financial creditors stood at ₹ 6,521 crore.
The airline’s net loss widened to ₹3,600 crore in 2021-22 from ₹1,807.8 crore in the previous fiscal. The net loss was ₹1,346.72 crore in 2020-21.
In addition, GoFirst cited the example of Jet Airways, where lessors quickly took possession of aircraft, leading to a serious erosion in its asset value.
The Wadia group firm cited Jet Airways as saying that before it went bankrupt, it had a fleet of 112 aircraft.
However, after the insolvency was initiated against Jet Airways, it had only 11 aircraft left, which significantly hit its chances of resolution under the IBC, GoFirst said.
CIRP refers to the corporate insolvency resolution process under the Insolvency and Bankruptcy Code (IBC).
GoFirst has a domestic market share of around 8 per cent.
Air India, AirAsia and SpiceJet are already facing financial crisis, if GoFirst is not resolved, it will monopolize the market to the detriment of consumers and all stakeholders.
(With PTI inputs)