Tribunal To Hear Go First's Insolvency Plea On Thursday: Report

The National Company Law tribunal (NCLT) will hear Go First's insolvency plea on May 4, Thursday, The Economic Times reported.

Go First on Tuesday said it has been forced to seek voluntary insolvency resolution proceedings due to "serial failure" of Pratt & Whitney engines resulting in grounding of 50 per cent of the fleet and is no longer in a position to continue to meet its financial obligations.

The latest move by the Wadia group-owned carrier, which has been flying for more than 17 years, came after arbitration proceedings in Singapore and a suit filed in a US court seeking enforcement of the arbitration award last month.

In a detailed statement shared with PTI, Go First said it has been forced to apply to the National Company Law Tribunal (NCLT) because of the recurring and persistent issues with the GTF (Geared Turbofan) engines supplied by P&W.

Also, Pratt & Whitney has failed to repair those engines and/or provide sufficient spare leased engines as it was required to do pursuant to its obligations under the relevant agreements between them.

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.

"This 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).

"Even 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.

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".

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 airline, which has been grappling with engine issues since January 2020, said it has been forced to move the NCLT as P&W refused to comply with an order issued by the Singapore International Arbitration Centre (SIAC), an emergency arbitrator.

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.

(With PTI inputs)