Go First flights cancelled until May 9; DGCA directs airline to process refunds to passengers

Image for representation purpose only.
| Photo Credit: The Hindu

Crisis-hit Go First announced on Thursday that it has cancelled flights until May 9 due to operational reasons.

The Directorate General of Civil Aviation (DGCA) said the airline has suspended the sale of tickets till May 15 and is working to refund or reschedule existing bookings for future dates.

The DGCA has examined the response of Go First and has issued an order under the prevailing regulations directing them to process the refunds to passengers as per the timelines specifically stipulated in the relevant regulation.

The airline has sought various interim directions from the National Company Law Tribunal, including restraining lessors from taking back aircraft and regulator DGCA from taking any adverse action against the airline.

The Wadia group-owned airline, which has liabilities worth ₹11,463 crore, has sought voluntary insolvency resolution proceedings and the plea is set to be heard by the Delhi bench of the NCLT on Thursday.

In its petition filed before NCLT, the budget airline has sought directions to restrain aircraft lessors from taking any recovery action as well as restrain the DGCA and suppliers of essential goods and services from initiating adverse actions.

Another plea is that the DGCA, Airports Authority of India (AAI), and private airport operators should not cancel any departure and parking slots allotted to the company.

The airline also wants fuel suppliers to continue supply for aircraft operations and not terminate the present contractual arrangements.

Go First, which started flying more than 17 years ago, has said the non-supply of engines by Pratt & Whitney resulting in the grounding of more than half of its fleet has led to the current situation.

The carrier has total liabilities of ₹11,463 crore to all creditors, including a default of ₹3,856 crore towards operational creditors.

The dues towards aircraft lessors is ₹2,600 crore, according to the plea filed before NCLT.

As on April 30, the debt exposure towards financial creditors stood at ₹6,521 crore.

The airline’s net loss rose to ₹3,600 crore last fiscal from ₹1,807.8 crore in 2021-22. The net loss was at ₹1,346.72 crore in 2020-21.

Further, Go First has cited the example of Jet Airways, saying that lessors took swift re-possession of the planes leading to serious depletion of its asset value.

Citing Jet Airways, the Wadia group firm said prior to insolvency, it had a fleet size of 112 aircraft.

However, after the insolvency was triggered against Jet Airways, it was left with only 11 aircraft, which significantly affected its prospects of resolution under IBC, said Go First.

CIRP refers to Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code (IBC).

Go First has a domestic market share of around 8 per cent.

With Air India, AirAsia and SpiceJet already reeling under financial stress, if Go First is not resolved, then it will further monopolise the market leading to loss of consumers and all the stakeholders, it said.

(With PTI inputs)