Go First forced to file for insolvency due to Pratt & Whitney engine shortage: CEO Kaushik Khona
Khona told PTI that the airline, which employs over 3,000 people, has alerted the government and would submit a thorough report to the Directorate General of Civil Aviation
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New Delhi : Bankrupt domestic carrier’s Chief executive officer Kaushik Khona told PTI that Go First has cancelled all flights for May 3 and 4 and been “forced” to file for voluntary insolvency resolution procedures before the National Company Law Tribunal in Delhi.
“It is an unfortunate decision… but it had to be done to protect the company,” he added. “Go First is in financial trouble due to Pratt & Whitney’s engine shortage, which has grounded 28 planes, over half of its fleet.”
Khona told PTI that the airline, which employs over 3,000 people, has alerted the government and would submit a thorough report to the Directorate General of Civil Aviation. Flights will restart when its insolvency case is accepted.
Go First claimed it ‘had to take this decision owing to the ever-increasing number of faulty engines’ from Pratt & Whitney in a long statement Tuesday afternoon. The airline grounded 25 aircraft on May 1 due to these problems.
Go First pays oil marketing firms daily per trip using a cash-and-carry arrangement, but it doesn’t have enough flights to pay OMCs.
The airline said that P&W had “refused to comply with an award issued by an emergency arbitrator” requiring the delivery of 10 engines by April 27 and 10 more each month until 2023, forcing it to file for bankruptcy.
Go First stated Pratt & Whitney has “failed to provide any further serviceable spare leased engines” because there are no spares.
Since fiscal 2022, the airline has struggled to obtain finances. Reuters reported last month that Wadia Group was in negotiations with key partners to sell a controlling interest or depart the loss-making enterprise.
A senior airline official told ANI that Go First had “no plans to shed stake or exit the aviation business” and that the promoters were “committed to the business and are infusing further funds…”
Today, the airline reported’substantial funds’ of 3,200 crore over 36 months, including 2,400 crore in the previous 24 and 290 crore in April. Reuters believes the Wadia Group is hesitant to invest until the P&W problem is addressed.
The airline said that it had sought 8,000 crores in Singapore arbitration ‘in order to recover these (and other) damages’ from the engine supply problem, which had cost them 10,800 crore in missed revenues and associated expenditures.
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