Several passengers booked to fly with Go First were left stranded as the budget airline announced that it had suspended all flights on May 3 and 4 and filed insolvency proceedings.
India’s third largest airline Go First shared concerning news of severe cash crunch which forced it to cancel flights for two days and file for insolvency with the National Company Law Tribunal (NCLT). Several passengers booked to fly with the budget airline were left stranded as it announced that it had suspended all flights on May 3 and 4.
Go Airlines (India) Limited on Tuesday also said that it had approached the NCLT for resolution under Section 10 of the Insolvency Bankruptcy Code (IBC). Meanwhile, aviation regulator DGCA issued a show cause notice to Go First over cancelling flights for two days.
Nearly 50 percent of Go First’s A320neo fleet is grounded. The airline said that it has approached the NCLT because of “the ever-increasing number of failing engines supplied by Pratt & Whitney`s International Aero Engines”. It said that the “serial failure” of the engines has resulted in Go First having to ground 25 Airbus A320neo aircraft. The airline has said it continued to incur 100 percent of its operational costs, which set it back by Rs 10,800 crore in lost revenues and additional expenses. Go Airlines has sought compensation of approximately Rs 8,000 crore in the SIAC arbitration to recover these losses.
Go First had a market share of 10.8 per-cent in FY20 and was consistently profitable from 2010-2020 before it was hit by the problem of serial failure of Pratt & Whitney engines. It said that the grounding of aircraft due to faulty engines has increased from 7 percent in December 2019 to 31 percent in December 2020 and 50 percent in December 2022. It claimed that Pratt & Whitney had made ongoing assurances over the years which it “repeatedly failed to meet”. Pratt & Whitney is the exclusive engine supplier for Go First’s Airbus A320neo aircraft fleet.
The airline has seen an infusion of Rs 3,200 crore by the promoters into it in the last three years. Rs 2,400 crore of this was injected in the last 24 months. Rs 290 crore was infused into the airline in April 2023 alone. The total promoter investment in the airline since its inception is approximately Rs 6,500 crore. It said that it had also received significant support from the Indian Government’s exceptional Emergency Credit Line Guarantee Scheme. The airlines said that it will only be able to resume full operations by August/ September 2023 even if Pratt & Whitney complied with the arbitration award.