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Go First Airlines

Go First Airlines Enters Liquidation After Failed Revival Efforts

Go First Airlines, once a key player in India’s aviation market, has officially entered liquidation following a decision by the National Company Law Tribunal (NCLT) in Delhi. This development marks the conclusion of the airline’s protracted financial struggles, which began with operational setbacks and culminated in an unsuccessful attempt to revive the carrier.

The NCLT bench, comprising judicial member Mahendra Khandelwal and technical member Sanjeev Ranjan, approved the liquidation application after the airline’s creditors failed to secure a viable resolution plan. Go First, which has admitted liabilities of approximately ₹8,575 crore, will now undergo asset liquidation to settle outstanding debts.

The Road to Liquidation

The unraveling of Go First Airlines began in May 2023, when its promoter, the Wadia Group, filed for voluntary bankruptcy due to persistent delays in the delivery of aircraft engines from Pratt & Whitney. These delays grounded a significant portion of its fleet, severely impacting operations and revenue. The airline was subsequently placed under the corporate insolvency resolution process (CIRP) under India’s Insolvency and Bankruptcy Code (IBC).

Efforts to resuscitate the airline were hindered by mounting debts and a lack of commercially viable resolution proposals. Despite several months under the CIRP, the Committee of Creditors (CoC) unanimously concluded that restarting Go First’s commercial operations was unfeasible.

According to the NCLT ruling, the plans submitted by interested parties failed to meet the requirements of the IBC and were not financially sustainable. As a result, the court approved the CoC’s decision to liquidate the airline, effectively ending hopes for its revival.

Financial Impact on Stakeholders

The liquidation process will be overseen by Dinkar T. Venkatasubramanian, the court-appointed liquidator, in accordance with guidelines issued by the Insolvency and Bankruptcy Board of India (IBBI). The liquidator’s primary task will be to sell off the airline’s assets and distribute the proceeds among its creditors.

Go First owes substantial sums to its financial creditors, including ₹1,934 crore to the Central Bank of India, ₹1,744 crore to Bank of Baroda, and ₹774 crore to IDBI Bank. The airline also has significant liabilities to unsecured creditors, including ₹1,330 crore to Leila Lands Ltd and ₹90.88 crore to Bombay Burmah Trading Corporation. Additionally, employees are owed ₹75 crore in outstanding dues.

Lessons for the Aviation Industry

The collapse of Go First Airlines serves as a stark reminder of the challenges faced by low-cost carriers in a competitive and high-cost environment. Rising operational expenses, including fuel and maintenance, coupled with external pressures such as supply chain disruptions, make financial stability a daunting task for airlines without strong backing.

Experts note that the liquidation highlights the importance of robust financial management and operational efficiency for survival in the aviation sector. As Ashish Pyasi, a partner at Aendri Legal, pointed out, the liquidation process could take time, leaving many stakeholders, including employees and suppliers, with significant losses.

A Sobering End to a Turbulent Journey

Go First’s downfall underscores the fragility of the aviation industry, particularly for low-cost carriers operating in volatile markets. Once a significant player in India’s aviation landscape, the airline’s liquidation marks the end of its turbulent journey.

As Go First’s assets are liquidated and its creditors seek compensation, the case serves as a cautionary tale for airlines navigating the complexities of financial and operational challenges. For the industry at large, it is a reminder of the importance of resilience, adaptability, and strong financial planning in an ever-changing market.

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