Go First files for voluntary bankruptcy, grounds fleet
Go First grounded 28 of its Airbus A320neo aircraft, over half its fleet, making operations unviable as of May 1. Engine issues were cited as the cause.
The Indian aviation industry just lost another call sign after Vistara, and far more unhappily than a merger. The country's third-largest airline, Go First just declared voluntary bankruptcy.
Increasingly unreliable and malfunctioning engines from Pratt & Whitney's International Aero Engines have forced Go First to ground 28 aircraft—approximately 50 per cent of its Airbus A320neo fleet—as on May 1, rendering operations unviable.
As such, Go Airlines (India) Limited, commonly known as Go First (formerly GoAir), has filed an application with the National Company Law Tribunal (NCLT) in Delhi today under section 10 of the Insolvency Bankruptcy Code (IBC) .
The airline is owned by the Wadia Group.
In a statement, Go First said it was forced to take the step closing out its 17-year history—which saw it fly 84 million passengers—as the percentage of aircraft grounded due to malfunctioning Pratt & Whitney engines has increased from 7 per cent in December 2019 to 31 per cent in December 2020 and 50 per cent in December 2022. The airline stated that Pratt & Whitney failed to honour various ongoing pledges to support their product.
Go First said it was forced to apply to the NCLT after Pratt & Whitney, who are the exclusive engine supplier for its A320neo airplanes, refused to comply with an award issued by an emergency arbitrator appointed following the Singapore International Arbitration Centre's (SIAC) 2016 Arbitration Rules.
That order directed Pratt & Whitney to take all reasonable steps to release and dispatch a minimum of 10 serviceable spare leased engines to Go First by April 27, 2023. Another 10 were to be provided per month until December 20, 2023, with the goal of Go First returning to full-fledged operations and achieving financial rehabilitation.
Once the NCLT processes Go First's application under section 10 of the IBC, an interim resolution professional (IRP) will take over and operate Go First.
The airline's statement added that, had Pratt & Whitney followed the orders in the emergency arbitrator's judgement, Go First could have resumed full operations by August/September 2023.
"Despite the emergency arbitrator's order, Pratt & Whitney... has stated that there are no further spare leased engines available to comply with the emergency arbitrator's award as of the date of this press release," the airline has said.
It also announced its intention to take steps to enforce the award in the US and other international jurisdictions.
While GO FIRST awaits admission into the NCLT proceedings, it has set up a list of detailed FAQs on its site. The airline said it regretted the interruption and trouble that its customers, travel partners, creditors, suppliers and workers, who have remained committed to and grown with Go First, must face as a result.
"We have been obliged to take this action despite the promoters' investment of Rs 3,200 crore in the airline over the last three years, Rs 2,400 crore of which were infused in the last 24 months, Rs 290 crore in April 2023 alone. This takes the total promoter investment in the airline to almost Rs 6,500 crore since its establishment.
"Go First has also received significant assistance from the Government of India's Emergency Credit Line Guarantee Scheme," the airline said, stating that it took all measures to safeguard the interests of its stakeholders.
Figures in this story have been updated