Hit by severe fund crunch, Go First suspends all flights on May 3, 4

On Tuesday, the airline's chief Kaushik Khona said Wadia group-owned Go First will temporarily suspend flights on May 3 and 4 amid severe fund crunch.

Mumbai:Low-cost carrier Go First will temporarily suspend all its flights on May 3 and 4 amid a severe fund crunch, the airline's chief Kaushik Khona said on Tuesday. The Wadia group-owned carrier has also filed an application for voluntary insolvency resolution proceedings before the National Company Law Tribunal (NCLT), Delhi.

In a detailed statement shared with ETV Bharat, Go First said it has been forced to apply to the National Company Law Tribunal (NCLT) because of the recurring and persistent issues with the GTF (Geared Turbofan) engines supplied by P&W. Also, Pratt & Whitney has failed to repair those engines and/or provide sufficient spare leased engines as it was required to do pursuant to its obligations under the relevant agreements between them.

Promoters have infused funds worth Rs 3,200 crore into the airline in the last three years and out of the total amount, Rs 2,400 crore was injected in the last 24 months. An amount of Rs 290 crore was pumped in April this year. "This brings the total investment in the airline since its inception to approximately Rs 6,500 crore," the statement said.

Further, Go First said it has received significant support from the government's Emergency Credit Line Guarantee Scheme (ECLGS). "Even this collective and significant support has not been adequate to prevent the enormous damage caused by Pratt & Whitney's defective engines. "The grounding of close to 50 per cent of its fleet due to the serial failure of Pratt & Whitney's engines, while incurring 100% of its operational costs has set Go First back by Rs 10,800 crore in lost revenues and additional expenses," it said.

According to the airline, it is no longer in a position to continue to meet its financial obligations and has taken the step to approach the NCLT "to protect the interests of all stakeholders". Go Airlines (India) Ltd, which operates under brand Go First, has applied 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 statement said.

The airline, which has been grappling with engine issues since January 2020, said it has been forced to move the NCLT as P&W refused to comply with an order issued by the Singapore International Arbitration Centre (SIAC), an emergency arbitrator. The arbitrator had ordered P&W to take all reasonable steps to release and dispatch without delay to the airline at least 10 serviceable spare leased engines by April 27 and another 10 spare leased engines per month until December 2023, as per the statement.

"If Pratt & Whitney had followed the directions laid down in the award, Go First would have been able to return to full operations by August/September 2023 leading to Go First's financial rehabilitation and survival. "Pratt & Whitney has failed to provide any further serviceable spare leased engines at all at the date of this press release and has stated that there are no further spare leased engines available," the statement said.

The airline also said that it regrets the disruption and inconvenience that the latest move will cause to its customers, travel partners, creditors, and suppliers and, in particular, to its own employees.

As of March 31, Go First had grounded 30 aircraft, including nine on which the lease payments are due, reports quoting industry officials said. The company has a total of 61 aircraft in its fleet – 56 A320neos and five A320ceos, according to its website. Interestingly, the fall in revenue happens at a time when airfares are high and traffic is soaring after the pandemic. As per reports, the airline plans to operate 1,538 flights a week in the ongoing summer schedule, 40 lower than last year. The season started on March 26 and goes on till October 28.

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