The budget airline, Go First, is experiencing uncertainty regarding its return to the skies. The company has been continuously canceling flights and extending the suspension dates.
Currently, all flights have been canceled until May 30, 2023, with ticket sales remaining prohibited.
Due to operational reasons, Go First flights until 30th May 2023 are cancelled. We apologise for the inconvenience caused and request customers to visit https://t.co/W9zQ6X3vmu for more information. For any queries or concerns, please feel free to contact us. pic.twitter.com/norPCJLYD1
— GO FIRST (@GoFirstairways) May 26, 2023
The airline’s flight cancellations started on May 3 and have been consistently pushed back.
Airlines Continuously Extend Suspension Dates
According to a report by Aaj Tak’s associate channel India Today, Go First Airlines initially canceled flights until May 26, but the suspension has now been extended until May 28.
The company has filed for bankruptcy in the NCLT (National Company Law Tribunal) due to its deteriorating financial condition and cash crunch.
Subsequently, the aviation regulator (DGCA) issued a show cause notice to the airline.
GoFirst Airlines’ Flight Suspension Extended since May 3
GoFirst Airlines, which voluntarily initiated bankruptcy proceedings in the NCLT, first canceled flights from May 3 to 5.
The suspension period was then extended to May 9, and subsequently to May 12.
There were hopes of the company’s aircraft taking flight again, but the continuous extensions have now pushed the suspension date from May 26 to May 28.
CEO ensures Salary Payments
Go First CEO, Kaushik Khona, has assured the airline’s employees that their April salaries will be credited before the resumption of flights, as reported by Reuters.
Additionally, the DGCA has directed the company to submit a revival plan within 30 days.
The regulator has requested comprehensive information about flyable aircraft, pilots, employees, maintenance, and funds from the airline.
Five Key Reasons Behind Go First’s Crisis
The crisis faced by Go First Airlines can be attributed to five major factors:
Debt Burden: The company is burdened with a debt of Rs 6,527 crore, as stated in the NCLT petition.
Supply Disruption: The American company Pratt & Whitney, which supplied engines to Go First, has halted its supply.
Cash Crunch: The grounding of Go First’s aircraft has led to a severe cash crunch for the company.
Decreased Market Share: The airline’s market share has declined from 11.1% in May 2022 to approximately 6% currently.
Increased Losses: According to regulatory filings, Go First reported a net loss of $218 million in FY23, almost double compared to the previous year’s $105 million.
Go First Airlines Facing Challenges Since 2022
In 2022, Go First Airlines encountered its first major crisis when it had to ground its planes in July. Since then, its market share has consistently declined.
In May 2022, the airline transported 1.27 million passengers with an 11.1% market share.
However, by February 2023, the number of passengers dropped to 963,000, and the market share decreased to 8%.
Currently, it stands at around 6.9%, negatively impacting the airline’s financial health.
Wadia Group’s Long History Faces First Bankruptcy Threat
Go First Airlines is operated by the Wadia Group, a business conglomerate with a history of 287 years, predating India’s independence.
This is the first time any company within the Wadia Group has faced the risk of bankruptcy.
The Wadia Group has a diverse presence across various sectors, including airlines, FMCG, real estate, textiles, chemicals, and food processing. Its entry into the aviation sector in 2005 was relatively unplanned.
We have already seen the airline was having problems from 2022, but it got itself working somehow. The biggest reason Go First quotes for halting it’s services is the non-availability of airplanes. Their engine supplier Pratt & Whitney is not able to give any more engines. With less flights and more flying, it became difficult for GoFirst to do regular flights.
At the end they had to go to NCLT for resolution. There seems to be very low hopes of the company’s aircraft taking flight again soon, as the continuous extensions have now pushed the suspension date further.
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