Team-BHP (https://www.team-bhp.com/forum/)

-   Commercial Vehicles (https://www.team-bhp.com/forum/commercial-vehicles/)

-   -   Go First Airlines files for bankruptcy (https://www.team-bhp.com/forum/commercial-vehicles/265355-go-first-airlines-files-bankruptcy.html)

Wadia Group examining options of exiting Go First in whole or part.

https://airinsight.com/wadias-look-t...exit-go-first/


Go First commenced operations in November 2005. The airline’s website says that it has a fleet of 59 aircraft of which 54 are Airbus A320neo and 5 are A320ceo models. The Group has started talks with a strategic partner. It, however, does not name the strategic partner or whether the strategic partner was from the airline industry or not. The airline, which reported its highest-ever financial losses to date in FY2022, is facing more headwinds as a large part of its fleet has been grounded as it is facing spare part and after sales service issues primarily due to issues relating to Pratt & Whitney Geared Turbofan engines.

While the Group is said to have pumped in around Rs 3000 crores in the last 15 months in the airline the report adds that it is now unwilling until the engine issues are sorted out. In addition, the airline also received support from banks as part of the Indian government’s bailout through the Emergency Credit Line Guarantee Scheme (ECLGS).

Go First is not the best run of airlines either today nor was it a decade ago. It, like Spicejet, has shoddy management. Period. Given their disputes with Pratt & Whitney who claim they don't owe any compensation to Go First I wonder what price point this will be attractive as a buy to a potential buyer.

GoFirst cancels all flights for 3rd and 4th May. Is it on verge of bankruptcy?

GoFirst

Go First files for voluntary insolvency


https://twitter.com/PTI_News/status/...kphh4cx2g&s=08

Wise decision IMHO

If one relies solely on the press release, Go First seems to be blaming Pratt & Whitney entirely for the hole they are in today. This doesn't seem factual considering that Indigo also operates a large number of Airbus Neos with Gear Turbo Fan (GTF) engines. Additionally in this article below from a year ago - Pratt & Whitney has clarified that the initial issues with its engine have been resolved to the satisfaction of DGCA.

Something else seems to be the issue here - possibly the 'Shoddy management' as mentioned by OP.

https://economictimes.indiatimes.com...w/90415673.cms

Kaushik Khona, chief executive officer:

Link

Go First in its filing says:

They have blamed their decision for this move on the American engine supplier Pratt & Whitney as they are now left with only 55 engines and with almost half their aircraft down, it is impossible for them to operate a pan-India service.

But, can’t they honour the flight tickets they have already issued with their limited operational fleet instead of terminating it completely and that too during holiday season? Or have the overhead costs ballooned up due to mismanagement to such a level that they just can’t afford it any further?

Sir, quoting you since you are an insider to the industry and more so from the business side, so whom better to ask.

In the past couple of decades, we have seen a bunch of airlines shutting shop. For eg. Kingfisher, Air Deccan, Jet, Air Sahara, MDLR, and if not for the Government, you can count Air India too. And now Go. If you count regional airlines, the list would be much longer.

Obviously, given the nature of operations and requirements, this is capital intensive business. I would request you to apprise us that whether the current fares are not sustainable for the airlines, or it is operational inefficiency, or a case of shoddy management or something else that is pushing these airlines to bankruptcy. Indigo seems to fare better here but I am not sure it also sees green ink in their books. Your insight on the matter would be significant for us readers.

Thanks in advance,
Saket.

I feel the indian avaition market would become a duopoly in the near future with only Tata group and Indigo remaining in the frey. All other small airlines like spicejet, go airlines and akasa will either go bankrupt or get bought by either of Tata or Indigo groups. Airline business is highly capital intensive and players need deep pockets to sustain cyclical downturns. The high fuel prices owing to Russian war just when the industry was recovering from Covid is playing a large part in this situation.

Aviation would more or less become like telecom in India where only Jio and Airtel remain. Vodafone is clinging onto it's life while BSNL is a non entity. Both industries are highly capital intensive, highly regulated and difficult to make money.

Wanted to check how different airlines in India are fairing and flying as of now, applied filter on FlightRadar 24 to check. I have a hunch that SpiceJet is also going to go the Go First way sooner or later.

Have the exact same questions! I've heard the standard joke- 'How do you become a millionaire? Start off as a billionaire and then buy an airline!', but is the airline business that bad? Are the factors like airline fuel costs that unpredictable, or in India are the regulations that difficult to negotiate that most airlines can't seem to become viable? Or is it just an industry where only a major player/monopoly will work?

Also, like saket77 has already articulated, are the present fares just unsustainable? How does Indigo manage, are they really profitable or do they just have more cash to burn?

(Thanks in advance to any industry experts for any information!)

My wife and kid are due to fly from Delhi to Pune on Sunday 7th. And unfortunately the flight is GoAir !

I warned my better half to not book GoAir (not due to poor financials of the airline, but its below average service and frequent delays), but she went ahead and booked one :Frustrati The Pune-Delhi flight too was delayed by 2 hours last week. The worst part is the next convenient flight for both of them is Spicejet, which has similar traits :D

Should I wait until Friday to see if GoAir suspends flights further or go ahead and book another flight ticket of a convenient time ?

You undoubtedly know more than most of us, Narayan Sir. My two cents here, having worked for Jet Airways two decades ago (I may be wrong).

The airline business is among the few that require significant operating capital to run daily operations. The industry has particularly high expenditures for parking, fuel, and communications, which are then followed by additional expenses. For the break even point to be reached as soon as possible, the occupancy rate must be greater than 75%.

While it was good that Air Deccan started the trend of cost-cutting (by replacing their boarding pass printers, for example), poor coordination with ATC resulted in high fuel costs.

The fares need to be reviewed, raised, and other changes made if the airline sector is to continue and be healthy.

Indigo was wise to move to CFM Leaps entirely and cutting off P&W GTF's.

These P&W GTF's just don't work in polluted Airspaces/environments like India's, and currently wherever they're working fine is in North America, Europe.

Go-First was a prestige battle of the Wadias against Tata's, and Spice jet, well, save for Mr Singh's ability to default to every creditor and "work out" an arrangement later on lest monies never be recovered, would have gone bust many years ago.

It is interesting to see how MoCA looks at this, given their emphasis on aviation as a core infrastructure sector (rightly so) rather than an elitist business. Because one way or the other, most airlines do bleed significantly. Its high time that the tax regulation on the industry is reviewed critically if they have to reap long term benefits of the investments made by the operators (equipment, manpower).