Mumbai: Go Airlines India has filed for an insolvency resolution process under the nation’s bankruptcy laws, becoming the latest victim in an extremely price-sensitive industry which was battered by the pandemic.
The debt-laden Go First sought insolvency proceedings “due to the ever-increasing number of failing engines supplied by Pratt & Whitney’s International Aero Engines,” it said in a statement Tuesday. This resulted in grounding of 25 aircraft, or about half of its Airbus A320neo fleet, from May 1.
The application was filed today with the National Company Law Tribunal in Delhi, it said.
Go First, as the airline was rebranded ahead of a planned Rs36 billion ($440 million) initial share sale last year, has been bruised by a shortage of engines for its brand-new Airbus SE A320neo jets. Grounding of the flights denied the airline benefit from the resurgence in India’s air traffic which according to the nation’s aviation minister hit a post-Covid record on April 30.
The carrier, majority owned by Indian conglomerate Wadia Group that also controls cookie maker Britannia Industries and textile maker Bombay Dyeing and Manufacturing, had a local market share of 6.9 per cent in March, down from 9.8 per cent a year ago. The airline operates a fleet of 59 aircraft, including 54 A320nos, and flies to 34 cities, including 7 international destinations, according to its website.
Pratt and Whitney, a unit of Raytheon Technologies Corp., didn’t immediately respond to request for a comment.
India has been notoriously tough market for airlines with a cut-throat fare war, which has killed high-profile airlines like Jet Airways India and beer tycoon Vijay Mallya’s Kingfisher Airlines. Low-cost carrier IndiGo, controlled by Interglobe Aviation, now controls more than a half of the local market, luring flyers with cheap, no-frills and on-time flights.
The grounding of Go First’s A320neo fleet due to the “serial failure” of Pratt’s engines has set the airline back by Rs108 billion in lost revenues and additional expenses, according to the statement. The airline said it is “no longer in a position to continue to meet its financial obligations” as Pratt failed to provide the required spare leased engines.
Go First said its founders infused Rs32 billion rupees into the airline over the last three years, including 2.9 billion rupees last month.