To take off, Go Air must get relief from Singapore court

If the court does not grant Go First relief and direct Pratt & Whitney (P&W) to replace faulty engines, the airline cannot fly, possibly putting the whole recovery process into jeopardy, people familiar with the process said.

While the Singapore International Arbitration award had directed P&W to dispatch around 20 engines by December 2023, the engine maker had subsequently challenged it citing payment failure by the airline and the ongoing global supply chain shortage. In its petition which was reviewed by ET, P&W has claimed that the airline owes it over $100 million.

A person aware of Go First’s business plan said that current trends show that a minimum of six engines could fail by November 2023.

Resolution professional Shailendra Ajmera didn’t comment on the matter.

“The hearing in the Singapore arbitration case concluded in the last week of June. An order is expected by next week which will clearly set out whether Go First will have any engines at all, which is a prerequisite for the airline to start flying again,” said a second person familiar with the process.

Last week, ET reported that the committee of creditors (CoC) for Go First Airlines approved an in-principle interim funding of ₹425 crore so that the grounded carrier manages to fly again soon.

The funding is, however, subject to the carrier being given clearance by the aviation regulator DGCA. Permissions linked to the funding are the DGCA’s green light to allow the airline to operate. The regulator will conduct a security audit of the airline’s preparedness.

“If there are no engines, the airline will not fly. It’s as simple as that. Banks can even convince lessors or get a court order to disallow planes to be towed away but they will be helpless if there are no engines because the airline cannot fly without them. The Singapore court order is hence most crucial to prevent the planes from being grounded permanently,” said another person aware of the matter.

The airline has also filed a lawsuit against P&W in a Delaware federal court, seeking enforcement of an arbitration award that directed the engine maker to provide the airline with engines, failing which there is a risk of the carrier shutting down. P&W had challenged that order in the Singapore-based tribunal which is now awaiting a decision. After the order of the tribunal, Go First will have to again approach the Delaware court to enforce it.

The geared turbofan engine of P&W, which powers Go First’s A320 Neo aircraft, has much less life expectancy than promised especially in the dusty and harsh Indian conditions. Over the past two years on average in India, engines had to be removed from the wing before an average of 7,000 hours – way lower than the projected 12,000-hour life.

Go First owes creditors, led by the Central Bank of India, more than ₹6,500 crore. Central Bank has ₹1,987 crore of outstanding loans, including about ₹650 crore of post-Covid emergency lines.