Wadia-owned Go First has informed the Delhi bench of NCLT that it owes ₹11,463 crore to its creditors. This amount includes ₹6,521 Crores towards lenders. It has warned that the lenders’ exposure could go higher as the lessors have started invoking letters of credits.
The airline, in its application to the NCLT Delhi bench, has said that the resolution and survival of the company is a matter of “national importance” as it has a consumer base of over 1.8 million and a aviation industry market share of 8 per cent.
It has sought the court’s intervention for the preservation of the company’s assets and timely resolution with “paramount importance”.
On Wednesday, the airline suspended operations till May 15. Its NCLT application said it has already cancelled 4,118 flights in last 30 days with 77,500 passengers and will be constrained to cancel further flights.
The airline has said that it owes ₹344 crore to six lessors as of February 23. Other lessors too are in the process of invoking letters of credits to the tune of ₹1,400 crore.
“If the company loses possession of the aircraft and the legal right to operate them, then continuance of its business as a going concern will be at stake, which will directly impact the employability,” it explained.
Employees salaries
Go First has said it has 7,000 direct and 1,000 indirect employees. Go First hasn’t paid its employees salaries for April. However, it has clarified that through ECGLS, it has ₹208.25 crore which “can be drawn by the Interim Resolution Professional and can be used for the payment of salaries to the employees.”
The airline had earlier alleged that it was Pratt & Whitney’s inability to supply spare engines that caused its downfall. In its application, it has said that this has impacted the company’s ₹10,800 crore in lost revenue or additional expenses in losses. Besides P&W engines, the airline claimed its financial problems were also accentuated by Covid-19.
As of May 2, it owes ₹11,463 crore to its operational and financial creditors. It explained that currently, Go First’s assets are “not sufficient to meet its liabilities”.
Further, “due to such financial stress, the essential goods and service providers (including fuel suppliers) are not ready and willing to offer their services and it is becoming increasingly difficult to run the business of the company as a going concern.”
The NCLT will hear the matter on Thursday.