Go First Seeks Immediate Funding Boost to Resume Operations: Report
Go First, a cash-strapped airline that recently received conditional approval from the Directorate General of Civil Aviation (DGCA), is taking steps to secure short-term priority funding to kickstart its operations. To ensure it can commence operations smoothly, the airline has reportedly reached out to special situation financiers, including asset reconstruction companies (ARCs) and distressed debt funds, as per The Economic Times report.
Facing financial challenges, Go First is seeking quick funding from these specialized financiers to meet its immediate operational requirements and overcome its cash crunch. By approaching ARCs and distressed debt funds, the airline aims to secure the necessary capital to launch and sustain its operations in the short term.
On Sunday, Go First announced the cancellation of its flight operations until July 25, citing operational reasons. The aviation company conveyed this information through a post on its Twitter account. In response to the situation, Go First also stated that it has filed an application seeking immediate resolution and revival of its operations.
The cancellation of flight operations highlights the challenges the airline is facing and the urgency with which it is seeking to address them. By filing for immediate resolution and revival, Go First aims to find a swift solution to resume its services and overcome the operational issues that have led to the temporary suspension of flights.
“We regret to inform you that due to operational reasons, Go First flights scheduled till 25th July 2023 have been canceled. We apologize for the inconvenience caused by the flight cancellations,” Go First stated in an announcement.
The airline also acknowledged that it has filed an application seeking immediate resolution and revival of its operations. As a result of this situation, Go First indicated that it will be able to resume flight bookings shortly. The company expressed gratitude for the patience of its passengers and customers during this challenging time.
The cancellation of flights is likely a significant step taken by the airline in response to its financial difficulties and operational challenges. By seeking immediate resolution, Go First aims to find a solution to resume its flight services and address the issues that led to the cancellations. Passengers and stakeholders will await further updates to understand the progress of the airline’s revival plans and its future course of action.
On May 2, Go First decided to cancel its flights for the first time and voluntarily filed for bankruptcy before the National Company Law Tribunal (NCLT). The low-cost carrier cited delays from a US-based engine maker, Pratt & Whitney, as a significant factor in its inability to meet its obligations promptly. These delays led to the grounding of a portion of Go First’s fleet, exacerbating the airline’s financial difficulties.
To address its financial challenges and seek recovery, Go First has reportedly approached special situation financiers, including asset reconstruction companies (ARCs) and distressed debt funds, to secure short-term priority funding. The source indicates that the interest rate on these funds could be as high as 20% due to the uncertainty surrounding the airline’s recovery prospects.
Given the complexity of the situation and the uncertainty surrounding Go First’s financial recovery, the airline is taking measures to secure the necessary funds to revive its operations. However, the high-interest rates on short-term funding indicate the perceived risk associated with the airline’s financial health and the challenges it faces in overcoming its current financial crisis.
In a recent order, the Directorate General of Civil Aviation (DGCA) stated that it reviewed Go First’s resumption plan and accepted it, with the condition that the acceptance is subject to the outcomes of the writ petitions and applications currently pending before the Delhi High Court and the National Company Law Tribunal (NCLT).
While approving the resumption plan, the DGCA emphasized that Go First must adhere to all relevant regulatory requirements to maintain its Air Operator Certificate (AOC) continuously. The airline is obligated to ensure that all its aircraft engaged in operations remain airworthy and fit to fly at all times.
The DGCA’s order reflects its careful consideration of Go First’s resumption plan and the need to address the legal proceedings related to the airline’s financial situation. By stipulating compliance with regulatory requirements and aircraft airworthiness, the DGCA aims to ensure the safety and reliability of Go First’s operations as the airline works towards resolving its operational and financial challenges.
The DGCA has outlined specific requirements for Go First’s resumption of flight operations. According to the DGCA’s directives, none of Go First’s aircraft can be deployed for operations without first undertaking a satisfactory handling flight, ensuring that the aircraft are safe and fit for flying.
Additionally, the DGCA emphasizes the importance of notifying any changes within the company that may impact the resumption plan submitted by the Resolution Professional. This requirement ensures that the aviation authority is kept informed of any developments that could affect the airline’s readiness to resume scheduled flight operations.
The Resolution Professional, responsible for overseeing the airline’s restructuring process, is tasked with submitting a proposed flight schedule that aligns with the available resources, including airworthy aircraft, qualified pilots, cabin crew, AMEs (Aircraft Maintenance Engineers), and flight dispatchers. The proposed flight schedule must be presented to the DGCA for consideration, taking into account all necessary arrangements for the commencement of scheduled flight operations. This includes ensuring adequate interim funding to facilitate the resumption of operations.
The DGCA’s strict guidelines are intended to ensure the safety, stability, and compliance of Go First’s operations as it moves forward with its plans to resume flight services. By setting these requirements, the aviation authority aims to safeguard the interests of passengers and the public while closely monitoring the airline’s progress in its revival efforts.
