The CEO of the airline told PTI that it had filed for voluntary insolvency resolution proceedings before the National Company Law Tribunal.
| Photo Credit: Special Arrangement
Low-cost carrier Go First on Tuesday filed for bankruptcy at the National Company Law Tribunal and suspended its flight operations for the next two days over mounting losses it attributed to delays in delivery of Pratt and Whitney engines.
A senior DGCA official confirmed that the airline has suspended operations for May 3 and 4.
The airline in a detailed statement attributed its bankruptcy plea to the grounding of 50% of its aircraft fleet, i.e. 20 planes, due to delays in delivery of engines by Pratt and Whitney which it said resulted in loss in revenue along with additional expenses.
“The grounding of close to 50% of its A320neo fleet due to the serial failure of Pratt & Whitney’s engines, while it continued to incur 100% of its operational costs, has set Go First back by ₹10,800 crores in lost revenues and additional expenses. Moreover, Go First has paid ₹5,657 crores to lessors in the last two years of which approximately ₹1,600 crores was paid towards lease rent for non-operational grounded aircraft,” the airline said.
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, it added.
The current situation was precipitated, the airline maintains, by Pratt and Whitney’s refusal to take steps to immediately release 10 leased engines by April 27, 2023 and another 10 by December 2023, as per the order of the Singapore International Arbitration Centre in March. The airline says had the engines been made available it would have returned to full operations by August or September 2023.
“Pratt & Whitney has failed to provide any further serviceable spare leased engines at all, and has stated that there are no further spare leased engines available for it to comply with the emergency arbitrator’s award.” as per the statement.
The airline has sought a compensation of approximately ₹8,000 crores in the SIAC arbitration, and it says that if the arbitration is successful it will be able to pay dues to its creditors.
The airline said that once the NCLT accepts Go First’s application under Section 10 of IBC, an Interim Resolution Professional (“IRP”) will take over and operate the airline.