The Go First Bankruptcy

Go First which was earlier known as go air was an Indian low-cost carrier that was owned by the

Wadia Group conglomerate. In FY 2022, go first was the 4th largest airline in India by market

share operating to a total of 36 destinations (including 9 international) with its fleet of 5 older

Airbus A320-200 and 48 newer Airbus A320neos. But this airline ceased operations on May 3rd

and filed for a voluntary insolvency application before the National Company Law Tribunal.

What is a voluntary insolvency application?

Voluntary insolvency or voluntary liquidation is a company’s self-imposed winding up and

dissolution of the company that has been agreed upon by its shareholders or creditors. Voluntary

liquidation is when the company says it cannot pay off its debt and needs aid from other

agencies to sort it out. Voluntary insolvency is done when shareholders of the company decide

to put it into liquidation (i.e., that is converting assets to cash) to pay off the debts to the

creditors, lessors and banks.

Why did GO FIRST file for a voluntary insolvency application?

Go First has been facing financial headwinds for a very long time and has been on losses

since the financial year 2020/21. Since the year 2021, Go Air sheets show a negative graph and

the company has lost a total of Rs 80 billion rupees or 8000 crores. Well, the reasons for the

financial crunch are innumerable,

1) Covid-19

Covid -19 had a big impact on the aviation industry. Due to sudden lockdowns and cribs, almost

the entire fleet had to be grounded. The lockdowns and the restrictions on the movement of

passengers across the country, as well as the whole world, forced most flights to be cancelled

causing losses mounting up to 2000 crores for the company and more than 20,000crores for the

entire Indian aviation.

2) Change of Management/ Senior Executives

Go Air alias Go First in its 18 years of existence has seen a total of 10 Senior executives. One

of them Wolfgang-Prock Schauer, who was a respected professional in the aviation field, was

fired in 2017 and was alleged for stealing and selling the data. Also, the stepping down of Jeh

Wadia who was the founder of the airline is one of the reasons why Go First went to

bankruptcy. Unlike other rich kids in Mumbai, Jeh was driven by a vision and was known for

working hard on it. He had a mission in mind but that mission was severely affected when he

stepped down as the MD in 2021.

3) Pratt & Whitney’s Engines

In the single-aisle/narrow-body jet market, the engines are mainly manufactured by two

companies Pratt and Whitney and International Aero engines. Pratt & Whitney’s engines in

recent years have become less reliable due to their faulty engines and Go First was heavily

dependent on Pratt & Whitney for the engines of its 53 aircraft. Since the start of this year, Go

First was forced to ground almost 50% of the fleet due to the serious failures of the engines

manufactured by Pratt & Whitney. As a result, Go first suffered losses due to the grounding of

aircraft (ground fees for grounded aircraft) and also having to operate with only 28 aircraft.

The Go First management sees Pratt & Whitney’s inability to provide working engines on

time to its fleet as the issue which led them to the turbulent issues that there in today

and they have given an emergency petition in the international court in Singapore seeking

compensation worth 8000 crores for Pratt and Whitney’s lack of capacity to provide functional

perfect engines to the company.

While there are many more reasons for the Turbulence that Go First is facing right now, the

above three are the major reasons.

What does it mean for Indian Aviation?

Indian aviation is the fastest-growing aviation market in the world and with this development

and growth comes fierce competition, and it’s this competition that led to the collapse of many

Airlines like Kingfishers, Jet Airways, and Air Deccan.

While Go first airline’s bankruptcy may not affect Indian aviation directly, the other airlines

have increased the daily frequencies of flights between the major cities to necessitate the

pressure caused by the cancellations of the Go First flights, giving other aviation companies like

indigo and SpiceJet had huge turnovers and profits. Also, the Ministry of civil aviation has issued a

notice to all airline companies to keep a reasonable ticket price on the routes which was

dominated by Go First.

Future of Go First.

As of 31st May 2023, there has been no resumption of flights operated by Go First and the

the company have issued a public notice stating that all Go First flights have been cancelled till 4th

of June.

On the financial front, the insolvency that was submitted by the Wadia group on May 10,

Abhilash Lal of Alvarez and Marshal India professional services was appointed as the interim

resolution professional and the company is approaching the civil aviation ministry with its plans

to restart operations.

Although Go First has informed the DGCA that there is no definite timeline for the resumption

of flights, many experts believe that with sufficient funds, support from the government and a

good leadership Go First can take to the skies for one more time and only time can tell whether

Go First will again soar the skies of India or will they have the same fate as Jet Airways and

kingfishers. Article By:

Thejus Sam

(Writing Associate, TAO)

Design By:

Shefali Sinha

(Design Team Lead, TAO)