The airline, which has been driven to the verge of collapse by Pratt & Whitney’s (PW) inability to supply engines leading to half of Go fleet being grounded for months, made this announcement after suspending all operations on Wednesday and Thursday (May 3 and 4).
The DGCA has issued a show cause notice to the airline for cancelling all flights of May 3 and 4 without any “prior intimation” that is required to be given as per rules. This, the regulator says, is “non-compliance with conditions for approval of schedule” and will lead to passenger inconvenience.
Whether Go First flies, and operates how many flights, from May 5 remains to be seen.
Airline must make alternative arrangements for flyers: Scindia
Reacting to the development, civil aviation minister Jyotiraditya Scindia said: “Go First has been faced with critical supply chain issues with regard to its engines. The Centre has been assisting the airline in every possible manner.”
He added that it is incumbent upon the airline to make alternative travel arrangements for passengers, so that inconvenience is minimal.
The last 11 years have seen big airlines like Kingfisher-Air Deccan and Jet-Sahara combines shut down.
Air India escaped that fate after it was bought over by the Tatas. IndiGo also has dozens of planes grounded due to Pratt’s inability to supply engines, but its large aircraft orderbook meant the biggest airline opted for engines from CFM too, thereby hedging itself from PW’s unending failures.
Go First said it was forced to file an application with NCLT, Delhi, under the Insolvency Bankruptcy Code (IBC) “due to the ever-increasing number of failing engines supplied by PW which has resulted in Go First having to ground 25 aircraft (nearly 50% of its Airbus A320neo aircraft fleet) as of May 1, 2023.”
Go First says it has suffered a loss of Rs 10,800 crore due to this reason and has sought Rs 8,000 crore as compensation from the engine-maker. If it gets that money, Go hopes to “be able to address the liabilities of its creditors… However at this stage…. no longer in a position to continue to meet financial obligations.”
Once the NCLT processes the airline’s application, it may put in place an interim resolution professional to take over and operate Go First. The resolution of Jet Airways (grounded in 2019) under IBC has been a non-starter so far.
The groundings caused by “faulty PW engines” have grown from 7% (of total Go fleet) in December 2019 to 31% in December 2020 to 50% in December 2022. “This is despite Pratt & Whitney making several on-going assurances over the years, which it has repeatedly failed to meet,” the airline said in a statement.
The airline finally moved NCLT after PW – the airline’s only engine supplier for Airbus A320neos – “refused to comply with an award issued by an emergency arbitrator (which had directed PW to) take all reasonable steps to release and dispatch without delay to Go First at least 10 serviceable spare leased engines by April 27, 2023 and a further 10 spare leased engines per month until December 2023, with the objective of Go First returning to full operations and achieving financial rehabilitation and survival.”
Had PW complied with this order of the Singapore arbitrator, Go First says it would have been to resume full operations by this September. However till Tuesday, PW has “failed to provide any further serviceable spare leased engines at all, and has stated that there are no further spare leased engines available for it comply with the emergency arbitrator’s award,” the airline said while regretting the “disruption and inconvenience” the move will cause.
The promoter group has infused Rs 3,200 crore into the airline in the last three years, of which Rs 2,400 crores came in the last 24 months, and Rs 290 crore last month. “This brings the total promoter investment in the airline since its inception to approximately Rs 6,500 crore. Go First has also received significant support from the Government’s emergency credit line guarantee scheme,” it said
But all this was not enough to “prevent the enormous damage caused by PW defective and failing engines. The grounding of close to 50% of A320neo fleet due to the serial failure of PW engines, while it continued to incur 100% of its operational costs, has set Go First back by Rs 10,800 crores in lost revenues and additional expenses. Moreover, Go First has paid Rs 5,657 crore to lessors in the last two years of which about Rs 1,600 crore was paid towards lease rent for non-operational grounded aircraft,” the airline said.
Meanwhile, Go First has informed the Directorate General of Civil Aviation (DGCA) that all its flights are cancelled for the next two days.
DGCA issues notice
The DGCA has issued a show cause notice to Go First after the airline cancelled fresh bookings from May 3-4.
“It has come to the notice of the DGCA that Go First has cancelled all scheduled flights on May 3-4. No prior intimation has been given to the DGCA for such cancellations which is non-compliance with conditions for approval of schedule,” read the DGCA notice.
“Go First has failed to report in writing the cancellations and reasons thereof. Go First has failed to adhere to the approved schedule which would lead to passenger inconvenience thereby violating the provisions of CAR, Section 3, Series M, Part IV,” it added.
Go First troubles have been mounting since last summer as almost half its fleet of 61 Airbus A320 family planes is grounded mainly due to want of engines and/or spares from Pratt & Whitney and some due to non-payment of lease rentals. The airline is learnt to have filed an emergency petition in Delaware court against PW in which it has said there is a “significant risk that Go First will go out of business and be forced to declare bankruptcy” if not given engines soon.
Having so many aircraft on ground has badly hit the airline’s cash flow. Its domestic market share as fallen from 11.1% in May 2022 (when it was second to IndiGo’s 55.6%) to 6.9% this March.
The Go First website does not show any flight on the busy Delhi-Mumbai route for May 3 and shows all Mumbai-Delhi flights as “sold out” for May 4. The airline is reportedly not taking any bookings for Wednesday and Thursday. Some travel portals are not giving Go First option for these two days.
Oil marketing companies (OMC) have put the airline on cash and carry for some months now. However, May 3 and 4 flights suspensions is not due to Go First’s fuel supply being cut off. “We have not disconnected their supply. This may be due to some internal reasons of the airline,” said an official of a leading OMC.
Watch All flights will remain cancelled on 3,4 May, GoFirst informs DGCA