Wadia Group-controlled low cost airline GoFirst has withheld payments worth Rs 5 crore in February to its employees, hotel vendors, and transport vendors.
The situation
An official at the company says, “The airline regularly pays its fuel vendor, but all the rest are paid intermittently and this month at least, hotels and transport vendors have not been paid.”
He said that the airline has paid employees up to the designation of an assistant manager including its ground staff and cabin crew.
However the senior staff in all departments including pilots and engineers are yet to receive the same.
Already under govt aid
“Entry-level pilots usually make around Rs 1-1.25 lakh as salary every month while senior pilots make around Rs 5 lakh as salary every month,” an industry insider said.
Another said that the airline has assured the vendors that once it receives Rs 210 crore under the government’s Emergency Credit Line Guarantee Scheme (ECLGS) by the end of February they will be paid.
The airline has already availed Rs 600 crore under ECLGS till now.
The issue
The issue behind the non payment of dues has to do with pending payments with Pratt & Whitney for deliveries of engines.
Nine GoFirst planes were still grounded as of February 15.
Apart from the coronavirus pandemic and industry competition, the airline is grappling with the Pratt & Whitney engine issues that have forced it to ground many planes due to a shortage of spares.
GoFirst aims to have 53 operational aircraft in its fleet by the start of April.
CEO non-responsive
Its present fleet comprises 61 aircraft and employs around 265 pilots to operate these.
GoFirst’s employees have reached out to their respective managers and the chief executive officer Kaushik Khona over non-payment of salaries but have not received any response.
Outstanding dues for most vendors have accumulated over time and on average, 60-90 days of payment are owed to most vendors.
IPO plans stalled
The airline has also struggled to raise funds as its plans for a Rs 3,600-crore IPO have been delayed for the last two years.
As per protocol the airline will have to reapply for approval from SEBI since it missed its deadline to launch its IPO in August last year.
It got the approval in 2021 but had held back the share sale plan first in August 2021 after SEBI called the promoters, the Wadias, for a pending inquiry.
Then it snagged another delay in December 2021 when it called off its plans due to the outbreak of the Omicron wave of the pandemic.
Protests crushed
In July 2022, maintenance technicians of GoFirst went on “mass sick leave” for four days at multiple stations across the country.
They wanted the management to raise their salaries and reimburse some technicians for working without pay between April 2020 and November 2021.
This protest which began on July 10 in Delhi and then spread to Mumbai and Bengaluru on July 11, ended after the company asked the technicians to return to work by July 14 or risk termination.
