The National Company Law Tribunal (NCLT) ordered the liquidation of now insolvent Go First Airways on Monday.

On May 2, 2023, the Go First budget airline's owners – the Wadia Group – filed voluntary insolvency resolution proceedings before the NCLT sending shockwaves through the entire airline industry.

Issues with Pratt & Whitney

Go First was plagued by a peculiar problem – the purported failure of the jet engine manufacturer, Pratt & Whitney (PW), USA, to supply engines/spares for its aircraft that grounded nearly 40% of the fleet for several months before it was compelled to totally suspend operations from the first week of May 2023.

While the DGCA slapped a show-cause notice on the carrier for its abrupt actions that created havoc with thousands of flyers, then-Civil Aviation Minister Jyotiraditya Scindia had seemed sympathetic to Go First grappling with the engine problems.

While assuring that the government was helping out as best as possible, Scindia had also called upon Go First to make alternative travel arrangements for its flyers to avoid inconveniencing them.

According to Go First, the application under the IBC came after the ‘ever-increasing number of failing engines supplied by PW’ which led to the grounding of around 25 of its 61-strong Airbus A320Neo aircraft, or almost 40% of its fleet by April 30, 2023.

Go First said in a statement that the groundings due to faulty PW engines increased from 7% of its fleet in December 2019 to 31% in December 2020 and 50% in December 2022, and blamed PW for giving assurances but failing to meet them.

Depreciating finances

In view of this, the beleaguered carrier suffered a whopping loss of nearly ₹10,800 crore and even demanded ₹8,000 crore as compensation from the PW which could help Go First to meet its financial commitments/obligations.

Besides, Go First had also coughed up ₹5,657 crore to its lessors in the past couple of years comprising ₹1,600 crore as lease rent for the non- operational grounded aircraft.

Go First was also hampered by the PW reportedly not honouring the March 2023 award of the Emergency Arbitrator in Singapore to immediately provide the airline with at least 10 serviceable spare leased engines by April 2023 and 10 more per month till December 2023 to enable the carrier to resume full operations, financial rehab and survival.

An aviation official said that after the NCLT processes the Go First application, it could appoint an interim Resolution Professional (RP) to take over and re- start operations, adding that a similar exercise in 2019 with another grounded private carrier failed to take-off.

Though Go First’s promoters pumped in around ₹3,200 crore in three years back then, leading to a total investment of nearly ₹6,500 crore, plus support from the government’s emergency credit line guarantee, all this failed to help as the airline kept incurring 100% of its operational costs and with a total loss of ₹10,800 crores, it ‘succumbed’.

Legacy fades away

In the NCLT plea, the 17-year-old airline which operated over 32 flights to 29 domestic and 10 international destinations, has sought several interim directions including restraining the lessors from taking back their aircraft, any adverse action by the DGCA, suppliers of essential goods-services, etc.

Since launching low key operations in November 2005 as ‘GoAir’, Go First gradually climbed up to become the fifth largest private carrier, consistently profitable and expanding till the PW ‘engine troubles’ started from December 2020, hitting its operations and forcing it to ground in May 2023.

However, the owner-promoters made it clear that they were keen to revive and not sell the venture or even exit this sector.

The Go First imbroglio came at a crucial juncture for the country’s aviation sector which was soaring to pre-Covid 19 levels after the harsh pandemic.

(With inputs from syndicated feed)

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