You hear in the news that Go First will celebrate Diwali. What has happened with Go First that it has filed for bankruptcy in NCLT? Many people are getting worried; passengers are getting worried because no flight will take off on the 3rd, 4th, and 5th of Go First. Now if the flight will not take off, then what will happen after that? Ultimately, what is going to happen to the company? Are you guys thinking of investing in the stock market? So which companies are going to be affected by this bankruptcy? This will also be a question in your mind.,
Go First owns Vaidya Group. The airline started in 2004. Today Vaidya Group owns Britannia and Bombay Dynco. So these are big brands that Vaidya Group owns. The group is very big, but Go First has 59 aircraft. Of these, 54 aircraft are A320neo, and 5 aircraft are A320.Now this does not make much difference from the number or name. The difference is that the 54 aircraft had some problems. What was the problem? I will just explain it to you.
Today, there are about 180 to 185 flights, and about 30,000 passengers travel through Go First Airlines daily. Today they have 7000 direct employees. So now we must understand that if bankruptcy is filed, 7000 employees’ employment is in danger. Plus, if these flights don’t take off, then what will happen? On which shares will it have a positive effect? We are talking about the negative. So now let’s understand the problem. So there is a problem with the 54 aircraft in their engines. See, they have taken the engine from Pratt & Whitney Company.
This is a US engine maker company. Now these engines come on lease. This issue has been going on since 2019. What was the issue? That there was a problem with the engines. And if we talk about December2019,7% of Go First’s planes were on the ground. Meaning they were not able to take off. Now if the plane cannot take off, there will be two types of costs. The first cost is that the passengers will not be able to go in a plane that is not flying.
If the passengers cannot go, then the revenue from their tickets will be lost. The second thing is that if the plane is standing at the airport, there is a parking cost. There are many charges. Plus, you have employees who bear their costs because you are not taking them out suddenly. Now if all these costs come, then the company is losing money. It started losing money in 2019.This issue increased in 2020. 31% of aircraft were not able to take off.
So they were standing on the ground. And 2022, we are talking about December 2022, 50% of their aircraft could not take off. Due to this, the company has lost more than 10,000 crores. Now I told you that this loss has happened in two ways. One is that revenue is not coming. The other is that there are many other expenses, which we have just talked about.
Now the company is losing 10,000 crores. Now you must be seeing that Go First would get an IPO. They were going to raise 3600 crores from the public. So you will say it was good that the news came before the IPO. If you had invested your money, what would have happened to that money? Now we will talk about everyone. Now this issue is going on with the US company.
Now if it is going on with the US company and Go First is an Indian company, then the fight of the Indian company is now with the US company. So should they file a case in India? What to do? If you want to file a case against it, you must go to Singapore on SIAC. Singapore International Arbitration Center. Now why is this arbitration center made? Because the Singapore International Arbitration Center resolves disputes between companies at the global level.
So when the case happened here, then you know in whose favor the case went? It went in favor of Go First. The mistake was told about Pratt & Whitney. Here they were found guilty, and it was said that on an immediate basis, you have to give 10 engines to April 2023, that is, the last month that has gone in April, you will have to give 10 engines to Go Firsthand by December of this year, you will have to give 10 more engines to them.
On the contrary, the compensation for their loss will also have to be done by Pratt & Whitney. Now consider the loss of 10,000 crores, plus you have taken money from the bank; there are many creditors from whom you have taken the money; they are on top of Go First that give us our money. Here Go First was also defaulting for a long time. Because they were defaulting and creditors were creating pressure repeatedly, Go First went to NCLT.
Now NCLT, if any company in India is under a lot of pressure, then the company files for bankruptcy. When the company files for bankruptcy, then where does it go? It goes to NCLT; it goes to the National Company Law Tribunal. Now when a company goes to NCLT, then NCLT has two options. The first option is that this company should be sold. Insolvency means that assets will be sold, and the creditors who have to make money will be given whatever money comes according to them. But this first option is not taken before this; this is our second option.
So one option is simply insolvency. Because the company went away after saying insolvency or bankruptcy, NCLT will see what to do next for insolvency. The second thing is that can this company be revived? So can a resolution be drawn here? So for NCLT resolution, take out a resolution; it is such a big company, runs its NCLT, appoints IRP here, and hires an insolvency resolution professional. Now here, this person can have a firm.
So the IRP does the entire company’s analysis that if this company is sold now, what money will come, and how much money can be recovered? Plus, what steps can be taken if this company has to run? A plan of action can be prepared. So what is the work of IRP here that it has to take a plan of action here? And if the committee of creditors understands that plan of action, what is the committee of creditors? One bank has not given money; there are many banks, then their committee will be made.
Whoever has given money, the creditors who have given loans, their committee will be formed. And if 66% of the creditors and 66% of the people get approval, then work will be done on this action plan. Now the company that will be run will be run through this action plan. The company’s first owner was running, and its first management was running the company according to its own; now, work will not be done on it but according to this plan of action. So what can be the plan of action?
For example, the plan of action can be that today your Pert and Whitney engines are not being supplied to you. So if the creditors give some more money, the plan of action will give them IRP that if you give them some more money And they tie up with some other company and take the engines, then the aircraft can be put to work again. The company can be revived again so that you can give them some money here. Through that, they can take engines from a new company; there are many engine makers so that they can take engines from someone else.
So here some more money can be given, with which the company can be revived. Or if they reject this POA, the company will go into insolvency. Look, you must think about what will happen in insolvency. According to the data of 2020, Go First had assets of about 14,000 crores.When sold, they will know how much money has been recovered. At this point in today’s date, when I am writing the blog, I have to give about 9000 crores to Go First.
So if we go into insolvency, then it is possible that some money can be recovered by selling assets. But there is an additional cost for every day; they cannot take off every day, and there is no loss of revenue in it. Her interest is increasing; there are airport charges, and the company must bear many charges. So the more the delay, the more pressure the company will bear. The second thing is that by going into insolvency, the company’s direct employees, 7000 people, are working, and their jobs are gone. So the government does not want unemployment to increase in any way.
So there are a lot of things here that have to be considered. But if something happens that the company can be revived, or some foreign international company comes and buys it, then some plan of action can be prepared in this way. Point number one, but if it goes into insolvency, then assets will be sold, an auction will be done, and then the money in the hands of the person will be seen. Now what is the next thing from here? I told you that the company was trying to bring an IPO of about 3600 crores. Who are its creditors at today’s rate? Let’s understand them from here.
If you are already invested, I said, which shares will you directly affect? If the company is going for bankruptcy here, which shares will be affected? Let’s see.So, first of all, let’s talk about those banks that have given loans to GoFirst.So you see the share of Exis bank, 1.8% is below, hereExis bank is a creditor, the second is a central bank creditor,4.64% share is broken today.
Similarly, the Bank of Baroda is a 2.34% share below today; IDBI is a creditor, 0.82% below.You will have to keep an eye on the companies connected to Vaidya Group like we are talking about other companies ofVardiya Group, so Bombay Dying is about 1% below today, but Britannia is above0.4%, so you should keep an eye on these shares if you are invested in any of them.So we will not talk about the long term, but it can affect the short term if GoFirst becomes Diwali.