Bailing out: What went wrong at Go First Airlines
Summary
The airline claims a setback of ₹10,800 crore because 30-50% of its fleet has been grounded since 2020 due to continuing technical issues with Pratt & Whitney engines
One of the oldest private airlines in India has decided to file for bankruptcy citing persistent issues with Pratt & Whitney engines that power its fleet of 54 Airbus A320 aircraft. Mint explains what lies at the core of Go First’s troubled flight path.
What led to Go First filing for bankruptcy?
Go First claims a setback of ₹10,800 crore because 30-50% of its fleet has been grounded since 2020 due to continuing technical issues with Pratt & Whitney engines. It has also filed an arbitration against the engine maker seeking ₹8,000 crore in compensation. The arbitration award ruled that failed engines are largely responsible for Go First’s financial troubles and ordered 10 engines supplied by 27 April. But Pratt & Whitney failed to comply, with no clarity on future deliveries. The airline foresaw a sharp reduction in fleet, leading to unviable operations. Hence, it applied for bankruptcy.
What’s the issue with the engines?
The Wadia Group-backed airline ordered 144 fuel-efficient geared turbo fan engines from US-based Pratt & Whitney in 2012 for its new orderbook of 72 A320neo aircraft. Deliveries began in 2016, but the airline faced persistent technical issues from the very start, resulting in 30-34% of the fleet lying inactive in 2020-22. There were 289 engine changes and 221 engine swaps from 2016 to Feb 2023. The airline alleges Pratt & Whitney failed to repair unserviceable engines, provided defective engines, charged for maintenance visits for which no payment was due, and failed to provide sufficient spare engines.
How has Pratt & Whitney responded?
It said it’s complying with the March 2023 arbitration ruling and will not comment further as this is now in litigation. It said it is committed to the success of its airline customers, and continues to prioritize delivery schedules for all customers. Company officials claimed Go First has a lengthy history of missing its financial obligations to Pratt & Whitney.
Is this problem specific to Go First?
No. In India, Pratt & Whitney also supplies engines for A320 aircraft to India’s largest airline IndiGo. Some 30 IndiGo aircraft have also been grounded for months due to engine issues. Globally, the limited availability of replacement engines and shortage of repair slots from Pratt & Whitney have troubled the business plans of Turkish Airlines, Air Baltic, Air Tanzania and Air Senegal among others. They are concerned about the lack of serviceable engines leading to grounded fleet ahead of the peak summer tourist season.
What does it mean for Go First flights?
Go First has announced suspension of flights from 3 to 5 May. However, it is expected to extend the cancellation by another two weeks, Mint has learnt. The airline has said it will wait for the resolution professional to be appointed by the National Company Law Tribunal to decide its future course. The Directorate General of Civil Aviation has issued a showcause notice to Go First for inconveniencing passengers, and most travel agents have stopped booking tickets on the airline.
