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Lessons Learned: Go First's Bankruptcy Highlights Need for Risk Management in Aviation Industry

india News

Indian Oil Corp (IOC) is set to recover $61.14 million of jet fuel sales made to low-cost carrier Go First by cashing in on bank guarantees. The state-run company had been the sole supplier of jet fuel to Go First, which recently filed for bankruptcy protection due to engine issues that grounded half of its fleet. Indian retailers usually require bank guarantees from buyers for jet fuel sales to airlines. However, IOC had sold jet fuel worth about $6.11 million to Go First in the past few months without any bank guarantees after the airline had used up its credit limit.


it is not clear why IOC continued to sell fuel to Go First without bank guarantees, the company is optimistic about recovering the outstanding $6.11 million. According to a source at IOC, the bankruptcy of Go First was not caused by governance issues but rather due to unresolved problems with their faulty engines. dues to financial creditors as of April 30, but has defaulted on payments to operational creditors, including vendors and aircraft lessors.

The bankruptcy filing with the National Company Law Tribunal reveals that Go First's total debt to financial creditors was 65.21 billion rupees ($849 million) as of April 28.

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company owes 12.02 billion rupees ($156 million) to vendors and 26.60 billion rupees ($345 million) to aircraft lessors. IOC, Bank of Baroda, Central Bank of India and Go First have not yet commented on the matter.

The airline industry has been heavily impacted by the COVID-19 pandemic, with many airlines struggling to stay afloat due to reduced travel demand. In India, low-cost carriers such as Go First have been hit particularly hard, with some airlines facing bankruptcy and others being acquired by larger airlines to stay operational.

The bankruptcy of Go First is a reminder of the importance of risk management and financial prudence

companies operating in the aviation industry. Airlines need to ensure that they have adequate financial reserves and contingency plans in place to weather unexpected events such as engine failures or pandemics.

Meanwhile, suppliers such as IOC need to be cautious about extending credit and ensure that they have adequate security in place to protect their interests.

In conclusion, while the recovery of $61.14 million by IOC is a positive development, the bankruptcy of Go First serves as a warning to companies operating in the aviation industry to be prepared for unforeseen events and to take a prudent approach to risk management and financial planning.


wsn team is a Writer at WSN TIMES and has been covering the latest news. He covers a wide variety of news from early and late stage.

wsn team