The Wadia Group-owned Go First has filed for insolvency with the National Company Law Tribunal (NCLT), saying that US-based Pratt & Whitney (P&W) engines are to blame for the grounding of about half of its fifty-vehicle fleet.
Since Jet Airways filed for bankruptcy in 2019, this is the Country’s First Major Airline Collapse.
Go First under bankruptcy
Go First’s troubled low-cost airline canceled all flights on May 3 and May 4 earlier in the day due to a severe lack of funds. The move prompted the Director General of Civil Aviation to issue a show-cause notice explaining why civil action for a violation of the 1937 Aircraft Rules should not be taken.
The airline’s problems appear to have been sympathized with by the government. The minister of civil aviation, Jyotiraditya Scindia, stated that it was “prudent to wait for the judicial process to run its course” and that it was regrettable that the “operational bottleneck issue has dealt a blow to the airline’s financial position.”
According to Scindia, the government has been providing the airline with every possible support, and the issue has been discussed with the relevant stakeholders. He advised Go First to arrange alternate travel for passengers to minimize inconvenience.
Go First’s moneylenders knew nothing about the carrier’s arrangement to petition for deliberate bankruptcy, two financiers told the news office Reuters.
Go First stated in its statement that P&W’s failure to supply engines resulted in a loss of income of 10,800 crore rupees and expenses totaling 1,600 crore rupees for lease rent for non-operational grounded aircraft.
P&W was also sued by Go First on Tuesday in a Delaware court. The emergency petition seeks to enforce two arbitral awards that mandate P&W supply its Airbus 320 aircraft with engines immediately to support its operations.
Go First asserted that P&W’s refusal to comply with an emergency arbitrator’s award forced it to submit a petition to the NCLT. The request coordinated with P&W to dispatch no less than 10 functional extra rented motors by April 27 and a further 10 extra rented motors each month until December, Go First said.
