Bombay Burmah makes Rs 1,866-crore provisions for Go First exposure

The company owned a 33% stake in Go Airlines (India), which operates Go First, while the rest is owned by unlisted holding companies of Wadia Group

The holding company of the Wadia group, Bombay Burmah Trading Corporation (BBTCL), has fully provided for its exposure in the bankrupt GoAir Airlines, with a sum of Rs 1,865.66 crore for FY23. This provision in respect of its investments made in Go Airlines (GoAir) and other related financial obligations (excluding share of loss in Go Air during the year).

The company owns 33 per cent stake in GoAir Airlines Ltd, which operates "Go First" airline, while the rest is held by unlisted holding companies of the Wadia group.

The company also had a debt exposure of about Rs 290 crore this March, which had not been provided in that month, BBTCL said.

In a notice to the stock exchanges, the firm said GoAir's fast-deteriorating financial situation was because more than 50 per cent of its fleet had been grounded due to faulty Pratt and Whitney engines.

The company said P&W's refusal to provide the engines in accordance with two international emergency arbitration awards, further impacted its position. The airline's financial situation was also compounded by pressure from lessors demanding recovery of their planes. The airline was left with no other option but to file an application under section 10 of Insolvency and Bankruptcy Code, 2016 for initiation of corporate insolvency resolution process before the NCLT.

The NCLT admitted the application and appointed an Interim Resolution Professional (IRP) with specific directives to take all steps to ensure the execution of the award and that GoAir is kept as "a going concern" and running its operations smoothly.

The IRP appointed by the NCLT, along with the CEO and the management, is taking every possible step to revive the airline to meet its commitment to various stakeholders, the company said.

"The outcome will, of course, depend on delivery of engines by P&W, cooperation of lessors and the support of the Ministry of Civil Aviation, Airports and Banks," it said.

The firm posted a consolidated total income of Rs 17,079 crore and loss of Rs 533 crore in FY23.