New Delhi: Go Airlines, which operates the GoFirst brand, on Tuesday said it was forced to file an application with the National Company Law Tribunal (NCLT) for bankruptcy to protect the interests of all stakeholders. Pratt & Whitney”.
The low-cost airline has also stopped fresh bookings for the next two days. Any attempt to book a flight for May 3 or 4 on GoFirst’s website gives a ‘no flight’ response.
Citing issues with Pratt & Whitney, Go First said in a statement that it had to ground 25 aircraft, or about 50 percent of its Airbus A320neo aircraft fleet, by May 1, 2023. Connecticut-based Pratt & Whitney is the exclusive engine supplier. for GoFirst’s Airbus A320neo aircraft fleet.
Application for resolution and protection under section 10 of the Insolvency and Bankruptcy Code, 2016 was filed Tuesday.
In a related development, the Directorate General of Civil Aviation (DGCA) issued a show cause notice to GoFirst, stating that the fleet was grounded without any prior notice. It added that the airline “failed to adhere to the approved schedule which would cause inconvenience to passengers”, amounting to violation of civil aviation requirements (CAR) norms.
The regulator sought a response from the airline within 24 hours, along with details of steps taken to “minimize the inconvenience caused to passengers booked on flights for 3 and 4 May 2023”.
Additionally, according to US-based legal news website law360GoFirst filed an “emergency petition” in Delaware federal court, seeking enforcement of two arbitral awards that would have ordered the Pratt & Whitney partner to immediately provide the low-cost carrier with serviceable engines. are what the business says it needs to stay up to date.
Go First said in the statement that the percentage of planes grounded due to faulty Pratt & Whitney engines increased from 7 percent in December 2019 to 31 percent in December 2020 to 50 percent in December 2022. Many assurances are being given in the last few years, which it has repeatedly failed to fulfill.
The airline said it has been “compelled to apply to the NCLT after Pratt & Whitney refused to comply with an award issued by an emergency arbitrator appointed in accordance with the 2016 Arbitration Rules of the Singapore International Arbitration Center (SIAC)”. “.
The SIAC order directed Pratt & Whitney to take all reasonable steps to dispatch at least 10 serviceable spare leased engines without delay to GoFirst by April 27. It directed the aircraft engine maker to provide another 10 spare leased engines every month till December, with an aim to bring the airline back to full operations and “achieve its financial rehabilitation and survival”.
“If Pratt & Whitney were to comply with the orders in the award of the emergency arbitrator,
Go First will be able to return to full operations by August/September 2023,” the airline said.
It stated that Pratt & Whitney had failed to provide any serviceable spare leased engines, and claimed that it had no spare leased engines available to comply with the emergency arbitrator’s award.
ThePrint reached out to Pratt & Whitney via email for comment, but had not received a response by the time of publication. This report will be updated upon receipt of a response.
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‘Promoters put in 290 crores in April alone’
The Wadia Group-owned airline, which was looking to bring out an initial public offering (IPO) in 2021, said it was forced to take the step despite infusion of “substantial funds” of Rs 3,200 crore by the promoters. last three years. It said that Rs 2,400 crore was infused in the last 24 months and Rs 290 crore in April 2023 alone.
“This brings the total promoter investment in the airline since its inception to around Rs 6,500 crore. GO First has also received significant support from the Government of India’s Extraordinary Emergency Credit Line Guarantee Scheme … However, even this collective and significant support has not been enough to prevent the huge losses caused by Pratt & Whitney’s faulty and failing engines .
Go First said the grounding of around 50 per cent of its A320neo fleet while it continues to incur 100 per cent of its operating costs has set the airline back Rs 10,800 crore in lost revenue and additional expenses.
“Furthermore, GO First has paid Rs 5,657 crore to lessors in the last two years, of which around Rs 1,600 crore was paid towards lease rent for non-operational grounded aircraft, owned by the promoters and the Government of India Funds provided by the Emergency Credit Line Guarantee Scheme of It added.
To compensate for the loss, GoFirst said it has sought compensation of approx.
8,000 crore in SIAC arbitration.
“If GO FIRST is successful in arbitration, it is expected that GO FIRST will be able to address the liabilities of its small and large creditors. However, at this stage…GoFirst is no longer in a position to meet its financial obligations.
Once the NCLT processes its application under Section 10 of the IBC, an Interim Resolution Professional (IRP) will take over and operate Go First. The airline has said that its board and management will cooperate fully with the IRP.
Stating that it was compelled to apply to NCLT due to recurring and persistent issues with GTF (Geared Turbofan) engines supplied by Pratt & Whitney and its failure to repair and/or provide adequate spare leased engines was a failure, GoFirst said its management repeatedly tried to engage with Pratt & Whitney on the engine issue, but the firm did not respond constructively.
“Instead, despite its contractual obligations to provide additional leased engines within 48 hours of failure, it refused to provide sufficient additional leased engines to GO FIRST and refused to repair GO FIRST’s engines.” given,” it said.
(Editing by Amritansh Arora)
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