Go Frist plans to resume flights on May 24th

Go First, the budget airline of the Wadia group of Bombay Dyeing, is set to resume flights effective from May 24th. However, it is unclear if the Directorate General of Civil Aviation (DGCA) will grant the necessary permission. For now, DGCA has asked them not to accept fresh bookings. Also, currently, IOCL is supplying them fuel only on cash and carry basis. In these circumstances, it is unclear how they will manage to commence operations on 24th May. We have to wait and see, since these are just internal reports coming from the company sources and there is nothing official about it yet. According to the internal reports, the airline has readied a business plan to commence operations with just 23 aircraft; and obviously on a smaller scale than before.

Currently, Go First has access to 51 departure slots at Delhi’s main airport as also another 37 such departure slots at Mumbai’s main airport. That would still enable to only start with a very reduced fleet since most of its fleet with the Pratt and Whitney engines are still grounded and are unlikely to be allowed to take off. Apparently, the airline management is in parleys with the senior officials of the Indian aviation ministry. For now, they plan to resume flights and will approach the authorities for permission to resume bookings following a meeting that is scheduled on May 11th. However, it is still not clear how they will clear the hurdles of aircraft availability and paying for the fuel on cash and carry basis, since IOCL is unlikely to offer credit at this point of time.

As part of the effort to restart operations, albeit in a skeletal manner, the airline has already prepared a resumption plan which would shortly be submitted to the Directorate General of Civil Aviation (DGCA). The plan, in effect, will outline the number of aircraft it will operate and the destinations it will serve. Also, the airline needs to convince the DGCA that have the necessary cash to run the operations. It may be recollected that Go First had planned a Rs3,600 crore IPO last year, which it had to shelve due to adverse market conditions. Go First was one among the many large companies that shelved their IPO plans amidst the tightness in the IPO market, weak investor response and tepid post-listing performance.

Meanwhile, there are other more pressing concerns for Go First. On the one hand, Pratt & Whitney (part of the Raytheon group of the US) has decided to pursue legal recourse against claims made by Go First that Pratt & Whitney engines had caused the cessation of operations. The other major group they need to contend with is the aircraft lessors who are hell bent on taking repossession of half the aircraft fleet against their lease rentals dues. The lease rentals for the aircraft account for nearly 50% of the total outstanding dues of the company and remains a major bone of contention. Also, the final order from NCLT is also awaited on whether Go First can get creditor protection and the hearing is on 11th May.

It may be recollected that Go First had voluntarily filed for insolvency at the National Company Law Tribunal (NCLT). While the NCLT had accepted the application, it is yet to give a final decision. As the first step, the current management of Go First will be soon replaced by a court-appointed resolution professional from Alvarez & Marsal. Now any further call on resumption of flights will be taken by the RP and not by the Wadia group. Meanwhile, the DGCA has already pulled up the airline for its failure to deliver efficient and dependable services; and a show cause notice has also been issued to this effect. For now, the court order bars lessors from pursuing pending dues or terminating aircraft lease agreements. Even the airports cannot cancel the slots of the airlines since it would precipitate a crisis.

The experience with airline revival in the past has not been too great. Deccan and Sahara had to eventually sell out while Kingfisher vanished without a trace. Jet has failed to revive, despite years of efforts. History is not in support of Go First; at least for the time being.