Go First: What Led To the 'Grounding' Of This Airline The airline has been faced with critical supply chain issues with regard to their engines.Go First filed for bankruptcy blaming jet engine maker Pratt & Whitney (P&W) for grounding half of its fleet, however, P&W has refuted the claims

Soon after Go First filed for bankruptcy blaming jet engine maker Pratt & Whitney (P&W) for grounding half of its fleet, the US aerospace heavyweight said that the airline has a 'lengthy history of missing its financial obligations.'

A source at P&W told news agency ANI that the budget airline has a lengthy history of missing its financial obligations to Pratt & Whitney. In a statement, the US engine maker said, "We are committed to the success of our airline customers and we continue to prioritize delivery schedules for all customers. P&W is complying with the March 2023 arbitration ruling related to Go First. As this is now a matter of litigation, we will not comment further."

The airline said it had to take this step due to the ever-increasing number of failing engines supplied by Pratt & Whitney's International Aero Engines, LLC, which has resulted in GO FIRST having to ground 25 aircraft (equivalent to approximately 50 per cent of its Airbus A320neo aircraft fleet) as of 1 May 2023.

The airline has been faced with critical supply chain issues with regard to their engines. The GOI has been assisting the airline in every possible manner and the issue has also been taken up with the stakeholders involved. "Yet, it is unfortunate that this operational bottleneck has dealt a blow to the airline's financial position. It has come to our knowledge that the airline has applied to the NCLT. It is prudent to wait for the judicial process to run its course," said a statement by Jyotiraditya M. Scindia, Union minister for Civil Aviation.

Meanwhile, the DGCA has issued a notice to the airline on the sudden suspension of flights. It's incumbent upon the airline to make alternative travel arrangements for passengers, so that inconvenience is minimal.

What Airline Says

The percentage of grounded aircraft due to Pratt & Whitney's faulty engines has grown from 7 per cent in December 2019 to 31 per cent in December 2020 to 50 per cent in December2022.

This is despite Pratt & Whitney making several on-going assurances over the years, which it has repeatedly failed to meet. GO FIRST has been forced to apply to the NCLT after Pratt & Whitney, the exclusive engine supplier for GO FIRST's Airbus A320neo aircraft fleet, refused to comply with an award issued by an emergency arbitrator appointed in accordance with the 2016 Arbitration Rules of the Singapore International Arbitration Centre (SIAC).

"That order directed Pratt & Whitney to take all reasonable steps to release and dispatch without delay to GO FIRST at least 10 serviceable spare leased engines by 27 April 2023 and a further 10 spare leased engines per month until December 2023, with the objective of GO FIRST returning to full operations and achieving GO FIRST's financial rehabilitation and survival. If Pratt & Whitney were to comply with the orders in the emergency arbitrator's award, GO FIRST would be able to return to full operations by August/September 2023. Despite the emergency arbitrator's order, however, Pratt & Whitney has failed to provide any further serviceable spare leased engines at all, and has stated that there are no further spare leased engines available for it to comply with the emergency arbitrator's award," the airline said in a statement.

Fund infusion

The airline had to take the step despite fund infusion to the tune of INR 3,200 crore by the promoters in the last three years. Out of INR 3,200 crore, INR 2,400 crore were injected in the last 24 months and INR 290 crore in April 2023 alone. This brings the total promoter investment in the airline since its inception to approximately INR 6,500 crore. GO FIRST has also received significant support from the government of India's exceptional Emergency Credit Line Guarantee Scheme.

"The grounding of close to 50 per cent of its A320neo fleet due to the serial failure of Pratt & Whitney engines, while it continued to incur 100 per cent of its operational costs, has set GO FIRST back by INR 10,800 crore in lost revenues and additional expenses. Moreover, GO FIRST has paid INR 5,657 crore to lessors in the last two years of which approximately INR 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 company said.

In order to recover losses, GO FIRST has sought compensation of approximately INR 8,000 crore in the SIAC arbitration. If GO FIRST is successful in the arbitration, it is hoped that the airline will be able to address the liabilities of its creditors. However, at this stage, in the absence of Pratt & Whitney not providing the required number of spare leased engines in accordance with the order issued by the emergency arbitrator, GO FIRST is no longer in a position to continue to meet its financial obligations and it awaits admission into the NCLT proceedings.

An ongoing issue since 2020

According to an International Journal of Scientific Research and Engineering Development-– published in 2020, one of the major challenges for GoAir and its competitors operating Airbus 320new family of aircrafts was the engines supplied by Pratt & Whitney. Though Airbus A320 aircraft are manufactured by Airbus, there are various suppliers involved in the manufacture of the aircraft. "One such supplier is Pratt & Whitney, the supplier of the A320neo engine called the PW1100G. Now this new engine has been successful in the cold European and North American market, with features such as 16 per cent fuel efficiency and 75 per cent less noise as compared to its predecessor. In India the hot and humid weather conditions have been causing an accelerated and premature wear and tear of critical components of the engine causing grounding of the fleet and cancellation of scheduled flights," the report added.

In 2021, Go Airlines, which rebranded itself as 'Go First', also filed the prospectus for an initial public offering (IPO) worth INR 3,600 crore. In the last few years, the airline tried to launch IPO but failed.