Centre Extending Help To Cash-Strapped Go First: Civil Aviation Minister Jyotiraditya Scindia

Civil Aviation Minister Jyotiraditya Scindia said that the judicial process must be completed regarding Go First's insolvency application with the NCLT.

Civil Aviation Minister Jyotiraditya Scindia said that Go First ought to make alternative travel arrangements for passengers.

Source : PTI

Cash-strapped airline Go First has been faced with critical supply chain issues with regard to its engines, said Civil Aviation Minister Jyotiraditya Scindia. He said the Centre has been assisting the airline in every possible manner. 

"The issue has also been taken up with the stakeholders involved. Yet, it is unfortunate that this operational bottleneck has dealt a blow to the airline’s financial position," Jyotiraditya Scindia was quoted as saying by news agency ANI. "It has come to our knowledge that the airline has applied to the NCLT. It is prudent to wait for the judicial process to run its course. Meanwhile, the DGCA has issued a notice to the airline regarding the sudden suspension of flights. It’s incumbent upon the airline to make alternative travel arrangements for passengers, so that inconvenience is minimal," Scindia said.

Earlier on Tuesday, the domestic budget carrier filed an application for voluntary insolvency resolution proceedings before the National Company Law Tribunal (NCLT). Airline's chief Kaushik Khona said the airline has grounded 28 planes, more than half of its fleet, due to non-supply of engines by Pratt & Whitney (P&W). This has resulted in a fund crunch. "It is an unfortunate decision (filing for voluntary insolvency resolution proceedings) but it had to be done to protect the interests of the company," he said.

The airline has informed the government about the developments and will also be submitting a detailed report to the DGCA. Go First suspended its flights on Wednesday and Thursday due to a lack of funds to pay oil marketing companies (OMCs). The airline has been facing significant financial challenges as it has had to ground over half of its fleet due to recurring problems and the non-supply of Pratt & Whitney engines, which power its Airbus A320 Neo aircraft, the report said. This has seriously impacted the airline's cash flow.

The announcement was made by the airline’s CEO Kaushik Khona shortly after the Wadia Group-owned carrier said it will temporarily suspend flight operations on May 3 and 4 due to a "severe fund crunch". The flights will be restarted once the NCLT admits the application, Khona said.

Go First operates on a cash-and-carry model. It means that it has to pay OMCs daily for each flight and they can stop business if payments are not made, an official of the airline was quoted as saying by financial daily Economic Times.