Summary
- Go First has received approval for $12 million to cover urgent financial liabilities.
- The funds will probably be used to pay for worker salaries, airport fees, aircraft upkeep, and other mandatory expenses.
- Nonetheless, Go First still faces challenges, including worker retention issues, a decrease within the variety of pilots, and disputes with lessors.
India’s cash-strapped and grounded budget carrier Go First has been granted $12 million as corporate Insolvency Resolution Process (CIRP) cost to maintain urgent and mandatory liabilities. The airline is within the strategy of making a comeback, but no date has been finalized yet. It has several financial liabilities, comparable to aircraft upkeep, worker salaries, and airport fees, amongst many other things, and the most recent money approval will help with those.
Breather
Go First has received the approval for the Corporate Insolvency Resolution Process (CIRP) cost of ₹1 billion ($12 million). Rules dictate that the carrier needed a minimum of 66% of its lenders to vote in favor, and it received a powerful 98% vote. Only IDBI Bank abstained from voting, with all the opposite lenders voting in favor of Go First receiving the fund.
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Go First’s resolution skilled (RP) Shailendra Ajmera had asked for emergency funding earlier this month to pay for mandatory liabilities. The CIPR costs include around $4.5 million in worker salaries, $1 million for insurance premiums, around $640,000 for airport parking charges.
Not out of the woods, yet
The approval for emergency funds is, indeed, excellent news for Go First, which is facing several roadblocks on its path to business resumption. The airline is struggling to maintain its employees from leaving, with businessline reporting that of the two,198 employees on its payroll currently, 1,000 are serving their notice period.
The carrier saw a large exit of its employees, particularly pilots who were quickly employed by other airlines, comparable to IndiGo and Air India. Recent reports have even said that Go First is now only left with 100 pilots, as nearly 500 of the full 600 pilots it had have left the corporate in the previous couple of months.
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It’s also in a tussle with its lessors, who’re fearful concerning the losses from their planes getting stuck with the carrier. In one other setback to Go First, the Delhi High Court recently ordered the airline to not fly lessors’ aircraft as a part of scheduled maintenance.
The court said that the airline cannot consider scheduled maintenance as the explanation to fly its lessors’ aircraft. It added that the resolution skilled (RP) who’s managing the airline’s insolvency proceedings has been unable to present compelling reasons to perform these maintenance flights.
Concerning the airline
Go First was originally founded as GoAir and is owned by the conglomerate Wadia Group. In 2017, the airline was the fifth-largest airline in India and operated as an ultra-low-cost airline.
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At one point, the airline was operating 54 total Airbus A320 aircraft and was the third-largest budget airline within the country behind IndiGo and SpiceJet. But a series of developments, including the problems with its engine suppliers in addition to the COVID pandemic, hit the airline hard to the purpose where it needed to stop operations in May 2023.
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