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Go First files for bankruptcy; suspends flights for 3 days over engine issues

Go First, a low-cost airline, has suspended its flights for three days and filed for bankruptcy due to mounting losses attributed to delays in the delivery of Pratt and Whitney engines, which have grounded half its fleet. The airline has sought compensation of approximately INR 8,000 crore in the Singapore International Arbitration Centre (SIAC) arbitration, but some lessors have already started repossessing its aircraft. The Directorate General of Civil Aviation (DGCA) has served a show cause notice to the airline for sudden cancellations without prior information and has asked for its mitigation measures and plan of action to resume flights. The current situation occurred as Pratt and Whitney refused to release leased engines, resulting in Go First no longer being able to meet its financial obligations.

“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 INR 10,800 crore in lost revenues and additional expenses. Moreover, GO FIRST has paid INR 5,657 crore to lessors in the last two years of which approximately ₹1,600 crore was paid towards lease rent for non-operational grounded aircraft,” the airline’s statement said. It added that the grounding of its aircraft, which started in 2019, grew from 7% of its fleet to 31% by December 2020, and to 50% by December 2022.

The current situation was precipitated, the airline maintained, by Pratt and Whitney’s refusal to take steps to immediately release 10 leased engines by April 27, 2023 and another 10 engines by December 2023, as per the order of the Singapore International Arbitration Centre (SIAC). The airline said that, 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,” the statement said. As a result, it added, “GO FIRST is no longer in a position to continue to meet its financial obligations.” It has also taken steps to enforce the award in the U.S. and other international jurisdictions, including an emergency petition filed in the Delaware federal court against Pratt and Whitney.

The airline has sought a compensation of approximately INR 8,000 crore in the SIAC arbitration, and said that if the arbitration was successful, it would be able to pay dues to its creditors. However, some lessors have already started repossessing some of its aircraft, withdrawn letters of credit, and notified the airline that more aircraft will be removed from Go First’s custody, severely depleting the airline’s ability to maintain viable operations.

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