Go First seeks moratorium for revival as NCLT begins hearing insolvency plea

A pilot said if Go First decides to pay only base salaries after May 5 it would become difficult for employees to remain with the airline

Cash-strapped budget airline Go First has sought an interim moratorium as the Delhi chapter of the National Company Law Tribunal (NCLT) began hearing its voluntary insolvency plea on May 4. Go First has argued that it sees a big scope for revival and that a moratorium was needed as its only assets were the aircraft.

The airline had impeccable financial track record as a going concern till recently and there was no default till the filing of the petition on May 2, it said. Out of the 54 aircraft in its fleet, 28 are grounded 26 are in operation.

The announcement of filing a voluntary insolvency petition on May 2 was made by the airline’s CEO Kaushik Khona shortly after the Wadia Group-owned carrier said it will suspend flight operations on May 3 and 4 due to a "severe funds crunch". The flights will be restarted once the NCLT admits the application, Khona said.

Also Read: Why analysts are not surprised at Go First’s bankruptcy filing

Explaining why it was facing a funds crunch, Khona told news agency PTI that the airline had more than half of its aircraft grounded because Pratt & Whitney (P&W) had failed to deliver the engines it had ordered.

Go First said it had to take this step to protect the interests of all stakeholders. It has been forced to take this step despite the infusion of funds to the tune of Rs 3,200 crore by the promoters in the last three years since it had to ground nearly 50 percent of its A320neo fleet due to the serial failure of Pratt & Whitney engines, which set Go First back by Rs 10,800 crore in lost revenues and additional expenses.

Pratt & Whitney, the exclusive engine supplier for Go First’s Airbus A320neo aircraft fleet, refused to comply with an award issued by an emergency arbitrator appointed in accordance with the 2016 Arbitration Rules of the Singapore International Arbitration Centre (SIAC).

It had directed Pratt & Whitney to take all reasonable steps to release and dispatch without delay to G oFirst at least 10 serviceable spare leased engines by April 27 and a further 10 spare leased engines per month until December 2023, with the objective of Go First returning to full operations and achieving its financial rehabilitation and survival, the airline said.

Go First reiterated that the airline's aim is revival given the future of 7,000 direct and 10,ooo indirect employees.