India’s airlines Go First announced on Tuesday that it had filed for insolvency resolution because it was unable to pay its debts and that 50% of its fleet were grounded and blamed “faulty engines” manufactured by US firm Pratt & Whitney.
In addition, the airline that is owned by Wadia Group claimed that Pratt & Whitney disregarded an emergency arbitrator’s directive to deliver “at least 10 serviceable spare leased engines by 27 April 2023.” Pratt & Whitney responded by stating that it was “complying with the March 2023 arbitration ruling” and it cannot comment further as “this is now a matter of litigation”.
According to CEO Kaushik Khona, the airline has requested voluntary insolvency resolution proceedings before the National Company Law Tribunal (NCLT). Since the collapse of Jet Airways in 2019, it is the first significant airline in the nation to declare bankruptcy.
Go First served show cause notice
The airline confirmed earlier today that all flights would be cancelled for three days, from May 3 to May 5, due to weather. After this decision, the aviation regulator DGCA has given the airline a show cause notice.
The airline has been ordered to provide information on the efforts it took to lessen the inconvenience for passengers who had booked tickets for the cancelled flights. The DGCA has also asked the airline to provide action plan to function flights according to the sanctioned time table starting from 5th May 2023.
Indian aviation minister Jyotiraditya Scindia in a statement stated, “Go First has been faced with critical supply chain issues with regard to their engines. The government has been assisting the airline in every possible manner. The issue has also been taken up with the stakeholders involved. It is unfortunate that this operational bottleneck has dealt a blow to the airline’s financial position. It has come to our knowledge that the airline has applied to the NCLT. It is prudent to wait for the judicial process to run its course.”
Airline issues statement
The airline issued the following statement regarding its bankruptcy filing: “Go First has had to take this step due to the ever-increasing number of failing engines supplied by Pratt & Whitney’s International Aero Engines, LLC, which has resulted in Go First having to ground 25 aircraft (equivalent to approximately 50% of its Airbus A320neo aircraft fleet) as of 1 May 2023. The percentage of grounded aircraft due to Pratt & Whitney’s faulty engines has grown from 7% in December 2019 to 31% in December 2020 to 50% in December 2022. This is despite Pratt & Whitney making several on-going assurances over the years, which it has repeatedly failed to meet.”
According to Go First, the issue led it to ground 25 aircraft, or roughly half of its fleet of Airbus A320neo aircraft, costing it $1.3 billion in missed revenue and expenses.
