News Details- (Get Professional Updates on Whatsapp, Msg on 8285393786) More News

Go First Airlines files for Voluntary Insolvency before NCLT

Posted Date : 03-May-2023 , 08:39:52 am | Posted By CASANSAAR print Print
India’s turbulent aviation sector will likely see another player go belly up with Go First of the Wadias filing for voluntary insolvency before the National Company Law Tribunal (NCLT).

The budget carrier said it is cancelling all flights on May 3, 4, and 5 and will refund the full fares to the passengers.

The Directorate General of Civil Aviation (DGCA) has questioned the cancellation and issued a show-cause to the airline. Go First has been asked to submit its response within 24 hours.

In the past, the sector has seen the grounding of Kingfisher Airlines and Jet Airways. Though the NCLT has approved a resolution plan for Jet, it is yet to resume operations.

The airline has blamed engine supplier Pratt & Whitney’s to its Airbus A320neo fleet for the insolvency.

It said it had to resort to this action because of the rising number of failing engines supplied by PW's International Aero Engines.

Go First said it was forced to ground 25 aircraft, which it claimed equals around 50 per cent of its Airbus A320neo fleet, as of May 1, 2023.

``The percentage of grounded aircraft due to Pratt & Whitney’s faulty engines has grown from 7 per cent in December 2019 to 31 per cent in December 2020 to 50 per cent in December 2022. This is despite Pratt & Whitney making several ongoing assurances over the years, which it has repeatedly failed to meet.’’

PW has refused to comply with an award by a Singapore emergency arbitrator on March 30, the airline said.

The order directed Pratt & Whitney to take all reasonable steps to release and dispatch without delay to the airline at least 10 serviceable spare leased engines by April 27, 2023, and another 10 engines per month till December.

The carrier maintained that if Pratt & Whitney were to comply with the emergency arbitrator’s award, it would be able to return to full operations by August-September.

``The grounding of close to 50 per cent of its A320neo fleet due to the serial failure of Pratt & Whitney’s engines, while it continued to incur 100 per cent of its operational costs, has set Go First back by Rs 10,800 crore in lost revenues and additional expenses,’’ the airline said.

The airline paid Rs 5,657 crore to lessors in the last two years of which Rs 1,600 crore were towards lease rent for non-operational grounded aircraft.

``In the absence of Pratt & Whitney not providing the required number of spare leased engines by the order issued by the emergency arbitrator, Go First is no longer in a position to continue to meet its financial obligations.’’

The ``additional consequence of Pratt & Whitney’s actions’’ has also driven some lessors to repossess aircraft, draw down letters of credit and notify further withdrawal of aircraft.

"Go First has been faced with critical supply chain issues about their engines. The Government of India has been assisting the airline in every possible manner. The issue has also been taken up with the stakeholders involved," civil aviation minister Jyotiraditya Scindia said.

? Operates 240 domestic flights daily to 27 destinations

? Employs 5,000 people

? Started as Go Air in 2005, rebranded to Go First

? Blames insolvency on engine maker Pratt & Whitney

Category : Insolvent Professional | Comments : 0 | Hits : 413

Search News
News By Categories More Categories