News Brief
Go First Nears Permanent Closure: Bankruptcy-Stricken Airline Extends Operational Grounding Until 4 February
Go First airline (Representative image)
Go First's announcement on X on Friday (15 December) that all scheduled flights until 4 February are canceled hints that another billionaire-backed airline teeters is on the edge of permanent closure. This is an extension of grounding initiated in May.
Go Airlines India Ltd.'s CEO Kaushik Khona resigned in November due to the inability to revive the carrier and six months of unpaid staff wages, NDTV reported. The airline had entered bankruptcy protection in May.
Jindal Power Ltd., Go's sole potential buyer in its insolvency resolution process, has opted not to bid. Challenges abound, including uncertainty about the number of planes, as the aviation regulator signaled their return to lessors. With 54 Airbus SE A320neos grounded, Go has not responded to requests for comment, and Jindal has remained silent as well.
Go's creditors, including Central Bank of India, Bank of Baroda, and Deutsche Bank AG, may resort to selling assets piecemeal, given the company's outstanding debts of about Rs 65 billion ($780 million) to financial creditors as of April.
Legal expert Sandeep Bajaj suggests that the resolution process may be stalled, and the company may be heading towards liquidation. Grounded airlines risk losing crucial assets like landing slots, staff, planes, licenses, and International Air Transport Association codes.
The Indian aviation landscape, dominated by IndiGo and a revamped Air India Ltd. with a combined market share of 73 per cent, poses significant challenges for smaller carriers. While some, like Akasa Air, have succeeded, others, including Kingfisher Airlines, Air Costa, and Jet Airways, have faced insurmountable challenges, reflecting the harsh realities of the industry.
Go's struggles, exacerbated by pandemic-related disruptions and operational issues, highlight the difficulty in establishing a niche compared to more successful competitors. As the airline industry grapples with ongoing challenges, the longer Go remains grounded, the more daunting its revival becomes.
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