The Committee of Creditors (CoC) for Go First, the bankrupt airline formerly known as GoAir, has decided to proceed with liquidation after exhausting all efforts to find a viable resolution to its financial crisis. The decision marks a significant turning point in the airline’s ongoing insolvency proceedings, which began earlier this year. The CoC has instructed the Resolution Professional (RP) to file an application with the National Company Law Tribunal (NCLT) to commence the liquidation process, effectively signaling the end of the road for the airline.
Go First, once a prominent player in India’s aviation market, filed for voluntary insolvency in May 2023, citing severe financial distress and an inability to service its mounting debts. The airline attributed its financial collapse primarily to ongoing engine supply chain disruptions, which led to the grounding of a significant portion of its fleet. The engine issues, compounded by the impact of the COVID-19 pandemic and heightened competition in the domestic aviation sector, resulted in the suspension of Go First’s operations.
In the months following its insolvency filing, the airline’s RP and the CoC explored multiple options to revive Go First, including seeking fresh funding and attracting potential investors. Despite these efforts, the CoC concluded that there was no viable path forward to restart operations or restructure the airline’s debt. The decision to liquidate the airline came after extensive deliberations and assessments of the airline’s financial condition, the value of its assets, and the market environment.
The liquidation process will involve selling off Go First’s assets, which may include its fleet of aircraft, ground handling equipment, airport slots, and other valuable assets. The proceeds from the liquidation will be used to repay creditors, in accordance with the guidelines established by the Insolvency and Bankruptcy Code (IBC). The NCLT will oversee the liquidation process, ensuring that it is conducted transparently and efficiently, with a focus on maximizing value for creditors.
The decision to liquidate Go First is a significant blow to its employees, creditors, and customers who were holding out hope for a possible revival. The airline’s workforce, which includes hundreds of pilots, cabin crew, engineers, and ground staff, faces an uncertain future as the liquidation process unfolds. For creditors, the liquidation could mean substantial losses, as the sale of assets may not be sufficient to cover the full extent of the airline’s outstanding debts.
The liquidation also underscores the broader challenges facing India’s aviation sector, particularly for smaller carriers struggling to compete with larger, more financially stable airlines. Rising fuel costs, intense competition, and operational hurdles have created a challenging environment for airlines, especially those with weaker balance sheets. Go First’s liquidation follows the recent exits of several other smaller carriers in India, highlighting the fragility of the country’s aviation industry.
Market analysts have pointed out that Go First’s liquidation will likely have wider implications for India’s aviation landscape. The exit of a significant player like Go First could reduce competition in the market, potentially leading to higher fares and less choice for consumers. Additionally, the liquidation process may impact other stakeholders, such as airport operators and suppliers, who have existing contracts and partnerships with the airline.
While the decision to liquidate Go First is seen as the last resort, it also reflects the difficulties faced by the CoC in finding a suitable resolution plan under the current economic circumstances. The liquidation may serve as a cautionary tale for other struggling airlines and underscore the need for more robust financial planning and risk management strategies in an increasingly volatile market.
As the liquidation process begins, the aviation industry will be closely watching the NCLT proceedings and the impact of Go First’s exit on the broader market. The case will serve as a critical benchmark for future insolvency proceedings in the sector and may prompt further discussions on the need for regulatory reforms to support struggling airlines. The outcome will also be keenly observed by creditors and investors looking to understand the recovery prospects in India’s complex and challenging aviation market.
