GoFirst declared bankruptcy a few years after Jet Airways’ operational shutdown in April 2019. Notably, in the aviation industry with the fastest growth in the world, two airlines have vanished in a short period of time. A day following GoFirst’s flight cancellations and the beginning of the insolvency process. On May 2, 2023, SpiceJet declared that it had mobilized a plan to rescue 25 grounded aircraft.

A void has been left in the Indian aviation market as a result of GoFirst’s abrupt departure. GoFirst was running about 200 flights per day. SpiceJet is attempting to fill this gap by resuming service on its grounded aircraft. In order to repair the planes, SpiceJet used money from the government’s Emergency Credit Line Guarantee Scheme (ECLGS) and improved cash accruals. As of May 3rd, SpiceJet’s fleet consisted of 82 aircraft, of which 31 were in storage and the remaining 41 were in use. An aircraft is regarded as being in storage if it has been 30 days since its last commercial flight. For getting its grounded fleet back in the air, SpiceJet has already mobilized about ₹400 crores, which will help to increase its top-line revenue. Due to a lack of funding, SpiceJet grounded its 31 aircraft.

On the other hand, 25 of GoFirst’s 57 total aircraft are grounded as a result of a delay in the delivery of engines from Pratt and Whitney, a US company. GoFirst grounded all flights until Thursday and directly blamed Pratt & Whitney, a maker of engines, for the airline’s predicament. With more planes being grounded over time, GoFirst began to run out of money. This resulted in bankruptcy. GoFirst, which has received ₹3,200 crores in equity infusion over the last three years, claimed that the engine manufacturer’s refusal to abide by an award made by an emergency arbitrator appointed in accordance with the Singapore International Arbitration Centre’s 2016 Arbitration Rules forced it to file for insolvency.

SpiceJet’s Chairman and Managing Director, Ajay Singh, stated that they are diligently working to get their grounded fleet back in the air as soon as possible. The majority of the airline’s ECLGS (emergency credit line guarantee scheme) funding will be used for this, allowing them to capitalize on and fully utilize the upcoming peak travel season.  In the continuation, It’s possible, according to SpiceJet Ltd., to borrow ₹400 crores to repair 25 grounded airplanes. Market analysts predict that SpiceJet will benefit from Go First’s demise and increase its market share.

GoFirst has requested ₹8,000 crores in compensation from an arbitral tribunal for the planes that were grounded. According to the statement, the planes’ grounding has cost an additional ₹10,800 crore in expenses and lost revenue. The company’s bankers met today, 3^rd May 2023, to review the situation and talk about the next steps.

A day after GoFirst declared bankruptcy on 2^nd May 2023, the share prices of aviation companies such as InterGlobe Aviation, Jet Airways, and Spicejet rose in the early morning trade on 3^rd May 2023. Less competition in the market following GoFirst’s filing for insolvency resolution under the ownership of the Wadia Group is likely what has increased the shares of the three airline carriers. The cash-strapped airline has claimed that it is no longer able to pay its debts and has put the grounding of half of its fleet on the defective engines produced by US company Pratt & Whitney. In response, the maker of aircraft engines allegedly spoke out on 3^rd May 2023, claiming that while it is committed to the success of its customers, Go First has a lengthy history of missing its financial obligations. At noon today, Interglobe Aviation Limited, the parent company of IndiGo, saw a 4.82% increase in share price to ₹2,166.95. In early morning trade today, shares of SpiceJet Ltd, the second-largest low-fare airline in the nation, rose by more than 5% at one point.  As well as Jet Airways’ stock price was up 5% at ₹60.90 per share.

GoFirst owns a total of  ₹6,521 crore in debt to its creditors, according to its bankruptcy filing. Insolvency filing came as a surprise to lenders to GoFirst, including the Central Bank of India, Bank of Baroda, IDBI, and Axis Bank, who noticed their shares trading in the red today. It should be noted that GoFirst had originally intended to raise approximately ₹3,600 crores through an IPO, but that plan was postponed because owners were hesitant to invest money in the losing business.

More often than not, the aviation industry is thought of as being challenging and highly vulnerable to rising crude oil prices. Since it began operations in 2005, GoFirst, a relatively minor player in the Indian aviation industry, has managed to stay in operation. However, it appears that it was unable to withstand the impact of COVID-19, which had a negative impact on the airline industry globally.