An Indian tribunal has ordered the liquidation of Go First Airways after a request from the airline’s lenders, CNBC-TV18 reported on Monday. The decision comes after the cash-strapped airline failed to secure a viable revival plan. The lenders, who have significant financial exposure to the airline, had earlier rejected bids from potential investors, leading to the court’s decision to liquidate the company.
Go First’s Bankruptcy
Go First Airways, a budget carrier, filed for bankruptcy in May 2023, citing severe financial distress. The airline had received two financial bids as part of the bankruptcy proceedings, with one bidder increasing their offer following pressure from the lenders. Despite these efforts, the lenders were not convinced of the viability of the proposed revival plans and opted for liquidation.
Outstanding Debt and Creditors
The airline owes a staggering 65.21 billion rupees ($781.14 million) to its creditors. Some of the major financial institutions affected include the Central Bank of India, Bank of Baroda, IDBI Bank, and Deutsche Bank. The burden of debt and the inability to generate sustainable revenue streams contributed to Go First’s downfall.
Go First’s financial troubles also extended to its foreign aircraft lessors, who were engaged in a legal battle with the airline. Initially, they were prevented from repossessing their planes due to a moratorium imposed by Indian courts. However, in April, a local court ruled in favour of the lessors, allowing them to reclaim their aircraft, adding further challenges to Go First’s operations.
Implications of Liquidation
The liquidation of Go First Airways marks the end of one of India’s budget carriers that once competed fiercely in the domestic aviation market. The move will have significant implications for employees, creditors, and passengers who were affected by the airline’s operational disruptions. Industry experts believe that the liquidation highlights the financial challenges faced by budget airlines in India and the importance of sustainable business models.
As of now, Go First Airways has not issued an official statement in response to the tribunal’s liquidation order. The airline’s management is expected to address stakeholders regarding the next steps in the liquidation process and the impact on pending obligations.
The liquidation process will now move forward under the supervision of the appointed authorities, and further details on asset disposition and debt recovery are expected in the coming months.