Go First said on Tuesday that it is no longer in a position to continue to pay its financial commitments and has been obliged to initiate voluntary bankruptcy resolution procedures as a consequence of the “serial failure” of Pratt & Whitney engines, which prompted the grounding of 50% of the fleet.
After arbitration hearings in Singapore and a lawsuit filed in a US court seeking execution of the arbitration ruling last month, the Wadia group-owned airline, which has been operating for more than 17 years, made its most recent move.
Go First said in a lengthy statement sent to PTI that it was compelled to file an application with the National Company Law Tribunal (NCLT) due to ongoing problems with the GTF (Geared Turbofan) engines provided by P&W.
Additionally, Pratt & Whitney failed to fulfil its obligations under the pertinent agreements between them by failing to repair those engines and/or offer enough spare leased engines.
Promoters have invested money in the airline totaling Rs 3,200 crore over the last three years, with Rs 2,400 crore of that total coming in the previous 24 months. In April of this year, 290 crore rupees were pumped.
The announcement said, “This brings the total investment in the airline since its founding to about Rs 6,500 crore.”
Go First said that the Emergency Credit Line Guarantee Scheme (ECLGS) of the government has provided it with a great deal of assistance.
“Even this widespread and considerable support has not been sufficient to stop the severe harm brought on by Pratt & Whitney's faulty engines.
According to the company, “Go First has lost Rs 10,800 crore in lost revenues and additional expenses as a result of the grounding of close to 50% of its fleet due to the serial failure of Pratt & Whitney's engines, while incurring 100% of its operational costs.”
The airline claims that it is unable to continue to pay its debts and has approached the NCLT “to protect the interests of all stakeholders” because of this.
According to a statement, Go Airlines (India) Ltd, which operates under the brand name Go First, has gone to the NCLT for resolution and protection under Section 10 of the Insolvency and Bankruptcy Code “due to the ever-increasing failure of the Pratt & Whitney engines that power its fleet”.
The airline, which has been dealing with engine problems since January 2020, said that P&W's refusal to abide by an order issued by the Singapore International Arbitration Centre (SIAC), an emergency arbitration, caused it to relocate the NCLT.
According to the statement, the arbitrator had instructed P&W to take all practical measures to deliver at once to the airline at least 10 serviceable spare leased engines by April 27 and another 10 spare leased engines each month until December 2023.
“Go First would have been able to resume full operations by August/September 2023, resulting in Go First's financial recovery and survival if Pratt & Whitney had adhered to the guidelines outlined in the award.
“Pratt & Whitney has failed to provide any further serviceable spare leased engines at all as of the date of this press release and has stated that there are no further spare leased engines available,” the statement said.
The airline expressed concern for the interruption and annoyance the most recent action would bring to its clients, business partners, creditors, and suppliers, especially to its own staff.
