India: Go First Airways files for bankruptcy, blames Pratt & Whitney
Indian airline Go First Airways filed insolvency proceedings with the National Company Law Tribunal on Tuesday, blaming Pratt & Whitney engines for grounding about half of its fleet.
The insolvency filing marks the first major airline bankruptcy in the country since Jet Airways filed for bankruptcy in 2019, and highlights the fierce competition in the industry.
Go First’s filing comes after Pratt & Whitney, the exclusive supplier of engines for the airline’s fleet of Airbus A320neo aircraft, refused to fulfill an order to deliver engines to the company that would have allowed it to return to operating at full capacity, according to the company.
“…by Pratt & Whitney’s failure to provide the required number of leased spare engines in accordance with the order issued by the emergency arbitrator, Go First is no longer in a position to continue to meet its financial obligations,” the airline said.
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Local media reported that Go First had suspended its flights for May 3 and 4.
Go First’s lenders were unaware of the airline’s plan to file for voluntary insolvency, two bankers familiar with the matter told Reuters.
The lenders met with the airline’s management a few weeks ago, but were not given any information, one of the bankers said.
The number of aircraft grounded due to the engine problem rose from 7% of its fleet in December 2019 to 31% in December 2020 and 50% in December 2022, according to the airline.
The groundings cost Go First 108 billion rupees ($1.32 billion) in lost revenue and additional expenses.
Grounded aircraft caused Go First’s market share to fall to 6.9% in March from 8.4% in January, according to the latest data from the Indian aviation regulator.
“I’m a little flabbergasted to hear that they are filing for bankruptcy and proceeding with the IBC,” stated Mark Martin, CEO of aviation consulting firm Martin Consulting LLC. “I still think this might not be the end of GO First. It should be a vehicle and a means for someone new to take over.”
Martin blamed 80% of Go First’s financial problems on Pratt & Whitney and said it was not a case of mismanagement on the part of the promoters.
The airline was seeking financing and Indian conglomerate Wadia Group was in talks to sell a majority stake or exit its shares completely.
“The additional fallout from Pratt & Whitney’s actions has also led some lessors to repossess aircraft, withdraw letters of credit and notify further aircraft recalls,” the airline said in a statement.
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