BENGALURU (Reuters) – Go Airlines (India) said on Wednesday its owner has no plans to exit the cash-strapped Indian carrier, a day after declaring bankruptcy, blaming Pratt & Whitney engines for shutting down about half of its fleet.
“The Wadia Group, and in particular Nusli Wadia, have always tried to see continued operations of the company and the airline, as normal, despite the fact that we are completely handicapped to this extent by Pratt & Whitney, CEO,” Kaushik Khona said. “There is no doubt that the Wadiya group has any intention of getting out or getting out,” he added.
In its bankruptcy filing, India’s third largest airline, which was recently renamed Go First, alleged that its failure came after the US carrier refused to comply with a neutralization order to release spare leased engines, which would have allowed it to return to full operations.
Go First argued in the arbitration that Pratt & Whitney’s engines had a “serious design defect” that caused premature engine shutdown and failure and had performed 510 engine removals and 289 engine changes between 2017 and 2023 because of the problem. As of this week, 28 of its aircraft have been grounded.
Pratt & Whitney said in the arbitral award that Go First’s arguments were based on “fabricated obligations.”
wondered the engine maker, which is owned by Raytheon
Go First could not prove that it was the “sole or exclusive cause – or any cause at all – of its poor financial situation,” Pratt said.
Go First is the first Indian airline to go bankrupt since Jet Airways in 2019, highlighting the stiff competition in the sector led by IndiGo and Air India.
Khona told Reuters that the bankruptcy proceedings were aimed at reviving the airline, not selling it, stressing that it had made all required payments to Pratt & Whitney.
Go First, which had nearly 10% of the Indian market in winter 2021, has seen this fall to 7% in October 2022. By March, weekly departures were at 1,390, down 39% from 2021 levels.
On Wednesday, the airline’s CEO said it was looking to dissuade lessors from taking action and confirmed that some parties had expressed interest in taking a stake in the airline.
“The Indian government is very keen that we do not fail,” Khona said.
Two bankers with knowledge of the development told Reuters that Go First’s lenders will likely meet on Wednesday to discuss what to do after Tuesday’s bankruptcy declaration.
The bankruptcy filing showed that the company owed financial creditors 65.21 billion Indian rupees ($797 million). As of April 30, Go First had not defaulted on any of those loans, the company said in the filing, seen by Reuters.
Go First’s insolvency is expected to be heard by an Indian court on May 4, a lawyer familiar with the matter told Reuters on condition of anonymity.
Go First’s bankruptcy could be a boon for its competitors.
“If the suspension is prolonged, other airlines adding capacity will look to capitalize on the slots vacated by Go First and grab market share,” Jefferies analyst Pratik Kumar said in a note to a client.
Go First lenders, including India’s central bank, fell on Wednesday
($1 = 81.8450 Indian Rupees)
Additional reporting by Chris Thomas in Bengaluru; Editing by Dania Ann Thoppil
Our standards: Thomson Reuters Trust Principles.
“Infuriatingly humble alcohol fanatic. Unapologetic beer practitioner. Analyst.”