MUMBAI, INDIA — Go First Requires USD 24.2M for flight resumption amid insolvency process"
In an update submitted to India's Directorate General of Civil Aviation (DGCA), Go First is detailing plans for a return to service. The airline has communicated that it would require INR2 billion rupees (USD24.2 million) to kickstart operations again with a fleet of 22 aircraft operating 152 daily flights, as reported by Business Standard.
Go First leadership, who have not been identified, spoke to the media outlet, informing that the airline had put forth its recovery plan to the DGCA. Despite currently having the capacity to operate up to 26 aircraft, it had a fleet of 54 before ceasing operations, of which a significant number were grounded. The airline operated approximately 200 flights daily at that time. Currently, the company still employs 340 pilots, 680 cabin crew, and 530 engineers. As of May 3, when operations were suspended, Go First owed INR65.21 billion (USD789.3 million) to banks, INR26.6 billion (USD322 million) to lessors, and INR12.02 billion (USD145.4 million) to suppliers.
Go First's insolvency process is being overseen by international consulting firm Alvarez and Marsal, who informed the DGCA about the financial requirements for the airline's recovery. They also shared that discussions were underway with lenders to secure the necessary funding. An undefined amount of credit has not yet been drawn, and INR4 billion (USD48.4 million) is potentially accessible through the Indian government's emergency credit line guarantee scheme (ECLGS).
The decision from lenders to release any funds for the recovery is pending, given that the DGCA is yet to greenlight the recovery and is expecting a comprehensive and viable business strategy. Alvarez and Marsal estimate that a daily expenditure of INR120 million (USD1.45 million) would be needed to resume operations under a cash-and-carry approach. The initial funding would cover outstanding salary payments for April and May and settle overdue payments to vendors.
While Go First's recovery plan is still under review by the DGCA, the airline has had to continuously push back its proposed resumption date and cancel additional flight schedules. As of now, flights are canceled until June 9. Travel agents across India, mindful of the recent Jet Airways refund issue, have threatened to abstain from selling tickets for Go First flights upon resumption unless the airline provides clarification on its refund and credit policies. They argue that their clients, affected by the grounding, are unclear about the status of their refunds. In response, Go First has issued several flight cancellation advisories assuring passengers of full refunds "shortly."
Recent data from Airbus regarding orders and deliveries reveals that Go First has reduced its pending order with the manufacturer by 16 aircraft. Information released earlier this week shows the original order for 144 A320-200neos has been reduced to 128, with the airline receiving no deliveries in May.
While Go First's recovery plan is still under review by the DGCA, the airline has had to continuously push back its proposed resumption date and cancel additional flight schedules. As of now, flights are canceled until June 9. Travel agents across India, mindful of the recent Jet Airways refund issue, have threatened to abstain from selling tickets for Go First flights upon resumption unless the airline provides clarification on its refund and credit policies. They argue that their clients, affected by the grounding, are unclear about the status of their refunds. In response, Go First has issued several flight cancellation advisories assuring passengers of full refunds "shortly."
Recent data from Airbus regarding orders and deliveries reveals that Go First has reduced its pending order with the manufacturer by 16 aircraft. Information released earlier this week shows the original order for 144 A320-200neos has been reduced to 128, with the airline receiving no deliveries in May.
