Go First crisis : NCLT to hear Go First’s insolvency plea on Thursday

The National Company Law Tribunal (NCLT) is scheduled to hear cash-strapped airline Go First's plea for voluntary insolvency on Thursday. The Wadia group-owned low-cost carrier on Tuesday filed for voluntary insolvency proceedings before the Mumbai bench of the National Company Law Tribunal.

On Wednesday, the Go First lawyer mentioned the plea before the NCLT on May 3 and sought a date for its urgent listing. The tribunal agreed to list the case accordingly. 

On Tuesday, Go Airlines (India) Limited or Go First said it has been “forced” to apply to the National Company Law Tribunal Delhi for resolution and protection under Section 10 of IBC due to the ever-increasing failure of Pratt and Whitney (PW) engines that power its fleet.

On Tuesday, the carrier said it will temporarily suspend flight operations on May 3 and 4 due to a "severe fund crunch". CEO Kaushik Khona said that the flights will be restarted once the NCLT admits the application.

The airline has also lodged a lawsuit against the US-based engine maker in a Delaware federal court, seeking enforcement of an arbitration award that directed PW to provide the airline with engines, failing which there is a risk of the carrier shutting down.

In a message to employees late on Tuesday, Khona told the employees that the airline has been crippled by recurring Pratt & Whitney engine troubles and assured them that the carrier is doing everything possible to navigate the situation with utmost care and concern for all staff.

The airline has grounded 28 planes, which is more than half of its fleet, due to the non-supply of engines by Pratt & Whitney (P&W). 

According to the airline, the arbitrator ordered P&W to supply at least 10 serviceable spare leased engines by April 27 and a further 10 spare leased engines per month until December 2023.

It said for more than 12 months, the airline's management has tried their level best to convince P&W to provide spare engines, repair engines. However, P&W has been stonewalling the discussions, the CEO said, adding that it moved Emergency Arbitration in Singapore.

On its part, US aerospace major Pratt & Whitney (PW) has said that Go First had a lengthy history of non payment. In a statement issued on Wednesday, Pratt & Whitney said: "Pratt & Whitney is committed to the success of our airline customers, and we continue to prioritize delivery schedules for all customers. PW 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." 

Not exiting: CEO Kaushik Khona

On Wednesday, CEO Khona said that owner Wadia Group is completely committed to the airline and that there is no question of their exit from Go First. The CEO said the insolvency proceedings were aimed at reviving the airline and not selling it.

He added that the airlines had made all required payments to Pratt & Whitney.

In an interview with news agency Reuters, Khona also said that they will not sell tickets till at least May 15. So far, the airline has issued a statement saying that flights on May 3, 4, and 5 have been cancelled. This prompted the Directorate General of Civil Aviation (DGCA) to send a show cause notice to the airline for cancellation of tickets with no prior intimation.

Also see: Two Mumbai-bound Go First flights diverted to Gujarat's Surat airport; official says reasons unclear

Also see: Central Bank of India, Bank of Baroda, IDBI Bank: Who are the major lenders to Go First?

Also see: 'Need 4 strong airlines': Aviation veteran Sanjiv Kapoor weighs in on GoFirst bankruptcy