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Go First – IOC Update: Government oil company Indian Oil Corporation is also facing financial crisis and GoFirst owes a huge amount. Indian Oil had sold jet fuel to GoFirst, which the company has not paid. Now the oil company has decided that it will recover its dues by encashing the $61.14 million bank guarantee. At the same time, the oil company hopes that the company will be successful in recovering unsecured sales of $ 6.11 million.
Indian Oil is the country’s largest air fuel i.e. air turbine fuel supply government oil company. Only Indian Oil used to supply jet fuel to GoFirst. In lieu of the aviation fuel sold by the government oil companies to the airlines, the airlines provide bank guarantees to the oil companies so that aviation fuel is supplied to the airlines without any hindrance.
Indian Oil has approached banks to encash bank guarantees of $61.14 million. This bank guarantee was issued by Bank of Baroda and Central Bank of India. In the last two to three months, Indian Oil has sold jet fuel worth $6.11 million to GoFirst without bank guarantees as the airlines’ credit limits were exhausted.
On 2 May, GoFirst suddenly canceled all its flights on 3 and 4 May. Along with this, the National Company Law Tribunal (NCLT) filed for Voluntary Insolvency Resolution to declare the company bankrupt, which is to be heard on May 4. Wadia group’s GoFirst said in the application filed in NCLT that it is unable to bear the burden of its financial obligations. Blaming it on Pratt & Whitney, the company said that 50 percent of the aircraft are not able to fly due to non-supply of the engines of the company’s aircraft on time. Go First has an outstanding loan of Rs 6521 crore. Bank of Baroda, Central Bank of India, IDBI Bank, Axis Bank had given loans to GoFirst.
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