The Wadia Group-controlled no-frills carrier GoFirst has withheld payments worth Rs 5 crore in February to its employees, hotel vendors, and transport vendors, multiple officials aware of the situation told Moneycontrol.
"The airline regularly pays its fuel vendor, but all the rest are paid intermittently and this month at least, hotels and transport vendors have not been paid," an official working with GoFirst said.
He added that the airline has paid employees up to the designation of an assistant manager including its ground staff and cabin crew, but has yet to pay senior staff in all departments including pilots and engineers.
"Entry-level pilots usually make around Rs 1-1.25 lakh as salary every month while senior pilots make around Rs 5 lakh as salary every month," an industry insider said.
Another official said that the airline is in talks with its vendors and has assured them of payment once it receives Rs 210 crore under the government’s Emergency Credit Line Guarantee Scheme (ECLGS) by the end of February. GoFirst has already availed Rs 600 crore under ECLGS till now.
The second official added that the airline has held back payments to vendors as it is looking to pay Pratt & Whitney for deliveries of engines. He added that nine GoFirst planes were still grounded as of February 15.
Apart from the coronavirus pandemic headwinds and intense competition, the airline is grappling with the Pratt & Whitney engine issues that have forced it to ground many planes due to a shortage of spares.
GoFirst aims to have 53 operational aircraft in its fleet by the start of April. It has a fleet of 61 aircraft and employs around 265 pilots to operate these.
Multiple queries sent to the airline remained unanswered at the time of publishing.
The first official also said that GoFirst's employees have reached out to their respective managers and the airline's chief executive officer Kaushik Khona over non-payment of salaries but have not received any response.
He added that outstanding dues for most vendors have accrued over time and on average, 60-90 days of payment are due to most vendors.
The airline has also struggled to raise funds as its plans for a Rs 3,600-crore initial public offering (IPO) have been delayed for the last two years.
According to protocol, the airline will have to reapply for approval from the Securities and Exchange Board of India (SEBI) since it missed its deadline to launch its IPO in August last year.
The airline had received approval from the market regulator for its IPO in 2021 but had held back the share sale plan first in August 2021 after SEBI called the promoters, the Wadias, for a pending inquiry, and then in December 2021, GoFirst further delayed the offering due to the outbreak of the Omicron wave of the pandemic.
In July 2022, maintenance technicians of GoFirst went on "mass sick leave" for four days at multiple stations across India. The employees had asked the management to increase salaries and reimburse some technicians for working without pay between April 2020 and November 2021.
The protest, which began on July 10 in Delhi and then spread to Mumbai and Bengaluru on July 11, ended after GoFirst asked the technicians to return to work by July 14 or risk being terminated.
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