Wadia group-owned air carrier Go First Airways on Tuesday filed for insolvency resolution proceedings in the National Company Law Tribunal, claiming it has been forced to move NCLT due to “serial failure” of Pratt & Whitney (P&W) engines resulting in grounding of 50 per cent of the fleet. The airline grounded 25 aircraft due to non-supply of engines by Pratt & Whitney (P&W).

 According to the airline, it is no longer in a position to continue to meet its financial obligations and has taken the step to approach the NCLT “to protect the interests of all stakeholders”. The airline, which has been grappling with engine issues since January 2020, said the situation came to such a pass as P&W refused to comply with an order issued by the Singapore International Arbitration Centre (SIAC), an emergency arbitrator.

“The grounding of close to 50 per cent of its fleet due to the serial failure of Pratt & Whitney’s engines, while incurring 100% of its operational costs has set Go First back by Rs 10,800 crore in lost revenues and additional expenses,” the airline said.

 Taking note of the development, aviation regulator Directorate General of Civil Aviation (DGCA) on Tuesday issued a show-cause notice to Go First after the airline decided to cancel flights for two days (May 3 and 4) amid a severe financial crunch.

The DGCA has sought an explanation within 24 hours from date and time of issue the notice.

“Whereas no prior intimation has been given to DGCA for such cancellations which is non-compliance with conditions for approval of schedule. Thus Go First has failed to report in writing the cancellations and reasons thereof. Further, M/s Go First is also directed to submit the details of the steps taken to mitigate the inconvenience caused to the-passengers booked on flights for 3rd & 4th May 2023, and submit their plan of action to operate flights as per the approved schedule from 05th May, 2023 onwards,” DGCA said in its notice.

Meanwhile, Civil Aviation Minister Jyotiraditya Scindia on Tuesday said it was unfortunate that the operational bottleneck related to engine supplies has dealt a blow to the airline’s financial position.

Against the backdrop of the airline filing an application for voluntary insolvency resolution proceedings, the Minister said, “It is prudent to wait for the judicial process to run its course.”

 â€œGo First has been faced with critical supply chain issues with regard to their engines. The Government of India has been assisting the airline in every possible manner. The issue has also been taken up with the stakeholders involved,” Scindia said in a statement.

In a detailed statement, Go First said promoters have infused funds worth Rs 3,200 crore into the airline in the last three years and out of the total amount, Rs 2,400 crore was injected in the last 24 months. An amount of Rs 290 crore was pumped in April this year.

 â€œThis brings the total investment in the airline since its inception to approximately Rs 6,500 crore,” the statement said. Further, Go First said it has received significant support from the government’s Emergency Credit Line Guarantee Scheme (ECLGS).

 â€œEven this collective and significant support has not been adequate to prevent the enormous damage caused by Pratt & Whitney’s defective engines. “The grounding of close to 50 per cent of its fleet due to the serial failure of Pratt & Whitney’s engines, while incurring 100% of its operational costs has set Go First back by Rs 10,800 crore in lost revenues and additional expenses,” it said.

Go First said it has lost revenue worth Rs 10,800 crore due to the grounding of close to 50 per cent of its A320neo fleet. The company said it has paid Rs 5,657 crores to lessors in the last two years of which approximately Rs 1600 crore was paid towards lease rent for non-operational grounded aircraft from the funds infused by the Promoters & Government of India’s Emergency Credit Line Guarantee Scheme.

The airline has also sought compensation worth Rs 8,000 crore in the Singapore International Arbitration Centre. In case the arbitration is successful, the company will be able to address the liabilities of its creditors, small and large.

 Go Airlines (India) Ltd, which operates under brand Go First, has applied to the NCLT for resolution and protection under Section 10 of the Insolvency and Bankruptcy Code “due to the ever-increasing failure of the Pratt & Whitney engines that power its fleet”, the statement said.

 The arbitrator had ordered P&W to take all reasonable steps to release and dispatch without delay to the airline at least 10 serviceable spare leased engines by April 27 and another 10 spare leased engines per month until December 2023, as per the statement.

 â€œIf Pratt & Whitney had followed the directions laid down in the award, Go First would have been able to return to full operations by August/September 2023 leading to Go First’s financial rehabilitation and survival.

“Pratt & Whitney has failed to provide any further serviceable spare leased engines at all at the date of this press release and has stated that there are no further spare leased engines available,” the statement said.

 The airline also said that it regrets the disruption and inconvenience that the latest move will cause to its customers, travel partners, creditors, and suppliers and, in particular, to its own employees.