Bankrupt airline Go First has informed pilots that it will stop paying their retention allowance from July 1.
"The retention allowance for June will be credited as part of our salaries by the end of the month, following which the airline will stop paying retention allowance," a pilot working with the airline told Moneycontrol.
He added that the senior management of Go First told pilots that the airline was finding it difficult to raise funds at the moment, because of which it will stop paying the allowance.
While the airline did not respond to mails at the time of publishing, a day after the story was published it said that retention bonus for flying crew remains in force.
"We would like to affirm and reiterate that the retention bonus for the flying crew remains in force and stands valid in its form," a Go First spokesperson said.
In an internal mail in May, Go First had said that it would pay a retention allowance of Rs 1 lakh to captains and Rs 50,000 to first officers, per month.
"The increased salaries will come into effect from June 1 and will include all captains and first officers who are on the company’s payroll," the mail read.
Another pilot told Moneycontrol that while Go First will stop paying the retention allowance from July, the senior management was hopeful of restarting operations next month and had asked pilots to remain with the airline.
He added that the senior management had informed pilots that they had themselves taken salary cuts of up to 50 percent in order to help Go First take to the skies again.
Meanwhile, the airline has further suspended operations till June 25.
"The new resolution professional that has been appointed has not stopped the payments of pilots. But due to the non-availability of funds, payments are pending," said a banker with one of the lenders of Go First.
Go First’s captains earn about Rs 5,30,000 a month on average, and when it filed for voluntary insolvency on May 3, the airline had a total of 7,000 employees on its payroll.
While accepting its insolvency petition, the National Company Law Tribunal (NCLT) has directed the carrier not to retrench any staff.
The Wadia-group airline's plea for insolvency was admitted on May 10 after the airline defaulted on payments of Rs 2,660 crore to aircraft lessors, and Rs 1,202 crore to its vendors.
Per its insolvency filing, the total liabilities of Go First stood at Rs 11,463 crore, of which bank dues are Rs 6,521 crore.
The Central Bank of India has the highest exposure of Rs 1,987 crore, followed by Bank of Baroda at Rs 1,430 crore, Deutsche Bank (Rs 1,320 crore), and IDBI Bank (Rs 58 crore), Acuite Ratings and Research said in a January 19 report.
To oversee the insolvency process, the Committee of Creditors (CoC) of Go First has appointed Shailendra Ajmera as the resolution professional (RP).
Ajmera has been entrusted with the task of formulating a revival plan, which has been submitted to the Directorate General of Civil Aviation (DGCA) for review.
Earlier this month, the Wadia Group was looking to raise funds to restart Go First as soon as possible, and had approached lenders to borrow up to Rs 225 crore, Moneycontrol had reported.
Lenders to the cash-strapped airlines have said that they are open to providing new loans in order to revive its operations once a clear resolution plan is in place.
An insolvent company can raise funds to remain operational as sanctioned by an interim resolution professional. The sanctioned limit of funds can be raised in future if lenders agree.
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