Struggling Indian airline Go First declared chapter yesterday, attributing it to the “faulty” Pratt & Whitney engines that grounded about 50% of its fleet. The airline’s collapse is the primary Indian airline chapter since Jet Airways in 2019, highlighting the extraordinary competition within the aviation sector, where rivals IndiGo and the just lately merged Air India and Vistara dominate.
Go First detailed Giveaway of 65.21 billion rupees to monetary creditors as of April 28, in accordance with its bankruptcy filing. Although it had not defaulted on these debts but, the corporate did default on funds to operational collectors, including 12.02 billion rupees to vendors and 26.60 billion rupees to plane lessors. The submitting was prompted after the engine supplier failed to adjust to an arbitration order associated to the release of spare leased engines.
The airline reported that grounded aircraft “due to Pratt & Whitney’s faulty engines” escalated from 7% of its fleet in December 2019 to 50% in December 2022, leading to 108 billion rupees (US$1.32 billion) in lost income and additional bills. Pratt & Whitney responded by stating that they have complied with the March 2023 arbitration ruling and that the matter is now subject to litigation.
The bankruptcy news shocked Go First’s lenders, who had been expecting to meet with the airline to evaluate the scenario and decide their subsequent steps. The airline’s troubles, which led to the postponement of its planned US$440 million IPO in 2021, resulted in its market share slipping to six.9% in March from 8.4% in January. The Wadia Group, the proprietor of Go First, was rumoured to be considering either selling its majority stake or utterly divesting its shareholding.
Go First’s downfall may benefit rival airlines as they attempt to satisfy the high demand for post-pandemic air journey. However, the sudden disruption in operations is expected to cause a supply constraint and potential airfare will increase..