On May 3 and 4, India’s budget airline, Go First, suspended its flight operations and filed for bankruptcy before the National Company Law Tribunal (NCLT) due to a “severe fund crunch.” The CEO of Go First, Kaushik Khona, said that the airline will resume its operations after the NCLT admits the application.
However, more than 5,000 people are employed with the airline, and its grounding of 28 planes, which is more than half of its fleet, has led to financial difficulties. The airline said that it has been forced to file for bankruptcy because of recurring issues with the Geared Turbofan (GTF) engines, which have been supplied by Pratt & Whitney (P&W).
The company has claimed that P&W failed to repair those engines and provide sufficient spare leased engines, which was required under the relevant agreements between them.
According to Go First, the promoters have infused funds worth Rs 32 billion ($430 million) into the airline in the last three years. Out of this, Rs 24 billion ($322 million) was injected in the last 24 months, and an amount of Rs 2.9 billion ($39 million) was pumped in April this year.
Additionally, the airline said that it has received significant support from the government’s Emergency Credit Line Guarantee Scheme (ECLGS), but even this support has not been adequate to prevent the damage caused by Pratt & Whitney’s defective engines.
The grounding of close to 50% of its fleet has set Go First back by Rs 10,800 crore ($1.5 billion) in lost revenues and additional expenses. The airline has informed the government about its decision, and it plans to submit a detailed report to the aviation regulator, the Directorate General of Civil Aviation (DGCA).
Go First has also posted its biggest annual loss in fiscal 2022. The latest development comes after reports that Go First was looking to raise funds, and that Wadia Group, which owns the airline, was in talks to either sell a majority stake or completely exit its shareholding in the airline.
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