BENGALURU, May 3 (Reuters) – India’s Go Airlines said on Wednesday its owner had no plans to exit the cash-strapped Indian airline a day after it filed for bankruptcy, blaming Pratt Engines & Whitney for aground about half of his fleet.
“The Wadia Group, in particular Nusli Wadia, has always tried to ensure that the business and flight operations continue, on a normal basis, despite the fact that we are completely disabled at this point by Pratt & Whitney,” said the CEO. said Kaushik Khona. “There is no question that the Wadia group intends to go out or relocate.”
In its bankruptcy filing, India’s third-largest airline, which was recently renamed Go First, claimed its failure followed the US company’s refusal to comply with an arbitration order to release engines spare leases, which would have allowed it to return to full operations.
Go First argued in the arbitration case that the Pratt & Whitney engines had a ‘serious design flaw’ which caused engine shutdowns and premature failure and that it had made 510 engine removals and 289 changes engine between 2017 and 2023 due to the issue. This week, 28 of its planes were grounded.
Pratt & Whitney said in the arbitration award that Go First’s arguments were based on “fabricated bonds.”
The engine manufacturer, owned by Raytheon
Pratt said Go First could not show that he was the “sole or exclusive cause – or any cause at all – of his poor financial situation”.
Go First is the first Indian airline to collapse since Jet Airways in 2019, underscoring intense competition in the industry led by IndiGo and Air India.
The insolvency proceedings were aimed at reviving the airline, not selling it, Khona told Reuters, confirming that it had made all required payments to Pratt & Whitney.
Go First, which held almost 10% of the Indian market in winter 2021, saw that share fall to 7% in October 2022. In March, its weekly departures were 1,390, down 39% from levels of 2021.
On Wednesday, the airline’s CEO said he was seeking to dissuade backers 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 don’t fail,” Khona said.
Go First lenders will most likely meet on Wednesday to discuss the way forward after filing for bankruptcy on Tuesday, two bankers with knowledge of the development told Reuters.
The airline owed 65.21 billion Indian rupees ($797 million) to financial creditors, according to its bankruptcy filing. As of April 30, Go First had not defaulted on any of those loans, it said in the filing seen by Reuters.
An Indian court is expected to hear Go First’s insolvency case on May 4, a lawyer familiar with the case told Reuters on condition of anonymity.
Go First’s bankruptcy could be a boon for its rivals.
“If the suspension is extended, other airlines adding capacity will seek to take advantage of the slots vacated by Go First and grab market share,” Jefferies analyst Prateek Kumar said in a customer note.
Lenders to go first, including the Central Bank of India
($1 = 81.8450 Indian rupees)
Reporting by Chris Thomas in Bengaluru; Editing by Dhanya Ann Thoppil
Our standards: The Thomson Reuters Trust Principles.