Go First Says Forced To File For Bankruptcy Due To 'Enormous Damage' By Engine Supplier
The ever-increasing number of failing engines has resulted in 50% of its Airbus 320neo aircraft fleet being grounded, Go Air said.
Low-cost carrier Go First said on Tuesday that it was forced to file for bankruptcy proceedings due to the enormous damage caused by Pratt & Whitney’s "defective and failing engines."
"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," the company said in a press release.
The ever-increasing number of failing engines has resulted in 25 aircraft being grounded, which is 50% of its Airbus 320neo aircraft fleet, it said.
The airline said it has been forced to apply to the National Company Law Tribunal after the engine-maker refused to comply with an award issued by a Singapore-based arbitrator, directing Pratt & Whitney to supply "without delay" 10 spare leased engines per month until December 2023.
According to the award, Pratt & Whitney was to supply at least 10 spare leased engines by April 27.
"If Pratt & Whitney were to comply with the orders in the emergency arbitrator’s award, Go First would be able to return to full operations by August/September 2023," the release said.
The engine maker has told the airline that there are no spare leased engines available for it to comply with the emergency award, the airline said.
"Pratt & Whitney is committed to the success of our airline customers, and we continue to prioritize delivery schedules for all customers. P&W is complying with the March 2023 arbitration ruling related to Go First. As this is now a matter of litigation, we will not comment further," Pratt & Whitney spokesperson told BQ Prime in an email reply.
Go First estimates that it has lost Rs 10,800 crore in revenue and additional expenses as it had to incur 100% operational costs while 50% of its fleet was grounded.
In addition, the airline has paid Rs 5,657 crore to lessors in the last two years, out of which Rs 1,600 crore was paid towards lease rent for non-operational grounded aircraft.
Go First has sought Rs 8,000 crore from Pratt & Whitney for compensation. With the U.S.-based company not providing the needed engines, Go First is no longer in a position to continue to meet its financial obligations, it said.
As a consequence, some aircraft lessors have repossessed the aircraft, drawn down letters of credit, and notified further withdrawal of aircraft, which will deplete the airline’s fleet and make it unfeasible for the airline to continue operations, it said.
Go First was started 17 years ago with the aim of providing low-cost services to flyers. The airline had a cumulative market share of 8.8% in 2022.
