GoFirst, which ceased operations in May last year, is to be wound up. The airline’s creditors unanimously voted to liquidate the company.
The Economic Times (ET), a leading economic English daily in India, reported on Monday, quoting an unnamed source connected with the attempts to revive the airline, that liquidation was the only option as “both the bids (received) were well below” the creditor’s expectations. The process must now be approved by the National Company Law Tribunal (NCLT), a quasi-judicial body adjudicating issues relating to Indian companies. Established under the Companies Act 2013, the tribunal was constituted in June 2016.
Ajay Singh, the promoter of SpiceJet, placed a bid to revive GoFirst. Singh said that he was putting in the bid in his personal capacity. Initially, the SpiceJet bid also included an online travel portal, Easemytrip.com. However, once the Delhi High Court allowed the lessors to reprocess their aircraft, Easemytrip.com decided to withdraw from the joint bid, saying there was no value left in the airline. The other bid had been put in by Sharjah-based Sky One Aviation.
In April this year, the Delhi High Court allowed the lessors of the 54 aircraft operated by GoFirst to take them back. With the aircraft repossessed, there was not much hope of reviving the airline, which probably explains why the bids for GoFirst were so low.
GoFirst owes Rs 65.21 billion ($781.14 million) to its creditors, which include the Central Bank of India, Bank of Baroda, IDBI Bank, and Deutsche Bank.
The ET report adds that the lenders can expect to recover some of the money from the airline’s ongoing litigation against Pratt and Whitney.
In May last year, the airline said it had been forced “due to the ever-increasing number of failing engines supplied by Pratt & Whitney, resulting in the grounding of 25 aircraft equivalent to 50 percent of its Airbus A320neo aircraft fleet, as of 1 May 2023”.
GoFirst is the second airline to shut operations in India in the past decade. Jet Airways, which had been flying domestically and internationally for 25 years, “temporarily ceased” operations in April 2019. Attempts are still on to revive Jet Airways, with the Kalrock Capital-Murari Lal Jalan consortium having won the bid in October 2020.
