Go Airlines, operating under the brand Go First, has applied to the National Company Law Tribunal (NCLT) for resolution and protection under Section 10 of the Insolvency and Bankruptcy Code. The airline, currently under bankruptcy protection, is seeking additional funds to support its efforts to resume operations. The lenders’ meeting held on Wednesday witnessed Go First’s request for between Rs 4 billion and Rs 6 billion ($122 million) in additional funds, according to banking sources cited by Reuters news agency. The lenders are expected to evaluate these proposals within the next 48 hours. The airline plans to resume operations in July, with a goal of operating 78 daily flights using 22 aircraft, subject to approval from the Directorate General of Civil Aviation (DGCA). Regulatory approvals play a crucial role in the planned resumption of operations.
Financial Creditors and Outstanding Debts
The bankruptcy filing of Go First reveals its list of financial creditors, including Central Bank of India, Bank of Baroda, IDBI Bank, and Deutsche Bank. The total amount owed to these creditors sums up to Rs 65.21 billion. Central Bank of India states that its exposure to the airline accounts for 0.91% of its total advances, amounting to Rs 13.05 billion as of March, with an additional Rs 6.82 billion sanctioned under a government-backed emergency credit guarantee scheme. The company has not defaulted on any of its dues to financial creditors by the end of April.
Engine Troubles and Legal Proceedings
Go Airlines has taken the case to the NCLT due to persistent failures of Pratt & Whitney engines that power its fleet. The airline has encountered engine problems since January 2020 and sought resolution and protection under the Insolvency and Bankruptcy Code. Pratt & Whitney (P&W) has been ordered by the Singapore International Arbitration Centre (SIAC) emergency arbitrator to provide the airline with at least 10 serviceable spare leased engines by April 27, followed by an additional 10 per month until December 2023. However, P&W has refused to comply with the order, leading Go Airlines to seek legal recourse.
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