Go Airlines India Ltd. filed for insolvency protection, blaming failing Pratt & Whitney engines for grounding about half its fleet of Airbus aircraft at a time when demand for travel is soaring.
(Bloomberg) — Go Airlines India Ltd. filed for insolvency protection, blaming failing Pratt & Whitney engines for grounding about half its fleet of Airbus aircraft at a time when demand for travel is soaring.
Debt-laden Go First filed with the National Company Law Tribunal in Delhi “due to the ever-increasing number of failing engines supplied by Pratt & Whitney’s International Aero Engines,” resulting in the grounding of 25 A320neo jets, it said in a statement Tuesday. Go also said that Pratt refused to comply with an award issued by an emergency arbitrator to provide the carrier with at least 10 usable engines by April 27, and an additional 10 a month until December 2023.
The partial grounding of Go’s fleet due to the “serial failure” of Pratt’s engines has set the airline back by 108 billion rupees ($1.3 billion) in lost revenue and additional expenses, according to the statement.
The airline said it is “no longer in a position to continue to meet its financial obligations” as Pratt failed to provide the required spare leased engines. The carrier also filed a motion in a Delaware court to enforce the arbitration awards.
Rebranded Go First ahead of a now-shelved 36-billion-rupee initial share sale last year, the company has struggled with a shortage of planes at a time when India’s air traffic surged to a post-Covid record.
Majority owned by Indian conglomerate Wadia Group, which also controls cookie maker Britannia Industries Ltd. and textile maker Bombay Dyeing and Manufacturing Co., the carrier has instead lost market share. The airline operates a fleet of 59 aircraft, including 54 A320nos, and flies to 34 cities, including seven international destinations, according to its website.
Pratt and Whitney, a unit of Raytheon Technologies Corp., didn’t immediately respond to request for comment.
Read More: Airlines Are Struggling With Engines Just as Travel Rebounds
India has been notoriously tough market for airlines, with its cut-throat fare war that has killed high-profile airlines like Jet Airways India Ltd. and beer tycoon Vijay Mallya’s Kingfisher Airlines Ltd. Low-cost carrier IndiGo, controlled by Interglobe Aviation Ltd., now controls more than a half of the local market, luring passengers with cheap, no-frills and on-time flights.
India’s Civil Aviation Minister Jyotiraditya Scindia said “critical supply chain issues” have dealt a blow to Go First’s finances. The government is assisting the airline and has taken up the engine issue with various stakeholders, he said in a statement. Go First should make alternative travel arrangements for passengers and wait for the judicial process to run its course.
India’s aviation regulator sought an explanation from Go First after it canceled flights scheduled for the next two days without providing adequate notice. The airline has to submit a plan of action to resume scheduled flights from Friday, the Directorate General of Civil Aviation said.
“The decision by GoFirst to file for voluntary insolvency comes in the middle of the peak demand season and when school vacations are about to begin,” said Satyendra Pandey, managing partner of aviation advisory firm AT-TV and a former Go First executive. “One hopes that flights will be flown but it is likely that stakeholders — from airports to ancillary service providers — will demand upfront payment. How the airline navigates this is yet to be seen.”
–With assistance from Jef Feeley.
(Updates with comments from analyst in 10th paragraph)
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