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 first Indian airline chapter since Jet Airways in 2019, highlighting the intense competitors in the aviation sector, where rivals IndiGo and the recently merged Air India and Vistara dominate.
Go First detailed debt of sixty five.21 billion rupees to monetary collectors as of April 28, according to its bankruptcy submitting. Although it had not defaulted on these debts but, the corporate did default on payments to operational collectors, including 12.02 billion rupees to vendors and 26.60 billion rupees to aircraft lessors. The filing was prompted after the engine supplier didn’t adjust to an arbitration order related 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, resulting in 108 billion rupees (US$1.32 billion) in misplaced income and extra 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.
Under wraps surprised Go First’s lenders, who had been anticipating to meet with the airline to evaluate the state of affairs and determine their subsequent steps. The airline’s troubles, which led to the postponement of its deliberate US$440 million IPO in 2021, resulted in its market share slipping to six.9% in March from eight.4% in January. The Wadia Group, the proprietor of Go First, was rumoured to be contemplating either selling its majority stake or completely divesting its shareholding.
Go First’s downfall may acquire advantage rival airways as they attempt to fulfill the high demand for post-pandemic air travel. However, the sudden disruption in operations is expected to cause a provide constraint and potential airfare increases..