By Tanvi Mehta, Dhanya Skariachan and Chris Thomas
BENGALURU (Reuters) -Go Airlines (India) said on Wednesday its owner had no plans to exit the cash-strapped Indian airline, a day after it filed for bankruptcy, blaming Pratt & Whitney engines for the grounding of about half of its fleet.
“The Wadia group, in particular Nusli Wadia, has always tried to see that the company and the airline operations go on, on a normal basis, in spite of the fact that we are completely disabled to that extent by Pratt & Whitney,” CEO Kaushik Khona said. “There is no question of Wadia group having any intention to exit or move out.”
In its bankruptcy filing, India’s third-largest airline, which recently re-branded as Go First, claimed its failure followed a refusal by the U.S. company to abide by an abitration order to release spare leased engines, that would have allowed it to return to full operations.
Go First argued in the arbitration case that Pratt & Whitney engines had a “serious design flaw” that caused engine shutdowns and premature failure and it had made 510 engine removals and 289 engine changes between 2017 and 2023 due to the issue. As of this week, 28 of its aircraft were grounded.
Pratt & Whitney said in the arbitration ruling that Go First’s arguments relied on “fabricated obligations”.
The engine maker, owned by Raytheon, also asked why Go First bought another 156 engines in 2019, three years after it began operating them, if they were defective from the start.
Pratt said Go First could not show it was the “sole or exclusive cause – or any cause at all – of its poor financial condition”.
Go First is the first Indian airline to collapse since Jet Airways in 2019, highlighting intense competition in the sector led by IndiGo and Air India.
The insolvency proceedings were aimed at reviving the airline and not selling it, Khona told Reuters, confirming it had made all required payments to Pratt & Whitney.
Go First, which had an almost 10% share of the Indian market in winter 2021, saw that fall to 7% in October 2022. By March, its weekly departures were at 1,390, down 39% from 2021 levels.
On Wednesday, the airline’s CEO said it was looking to dissuade lessors from taking action and confirmed some parties had expressed interest in taking a stake in the airline.
“The Indian government is very keen we should not fail,” Khona said.
Go First’s lenders will most likely meet on Wednesday to discuss what to do next after the bankruptcy filing on Tuesday, two bankers aware of the development told Reuters.
The airline owed financial creditors 65.21 billion Indian rupees ($797 million), its bankruptcy filing showed. 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 take up Go First’s insolvency matter on May 4, a lawyer familiar with the matter told Reuters on condition of anonymity.
Go First’s bankruptcy could be a boon for its rivals.
“If the suspension is prolonged, other airlines that are adding capacity would look to avail the slots vacated by Go First and grab onto the market share,” Jefferies analyst Prateek Kumar said in a client note.
Lenders to Go First, including Central Bank of India, Bank of Baroda and IDBI Bank fell on Wednesday.
($1 = 81.8450 Indian rupees)
(Reporting by Tanvi Mehta in New Delhi, Chris Thomas and Dhanya Skariachan in Bengaluru; Additional reporting by Siddhi Nayak and Sudipto Ganguly in Mumbai, Arpan Chaturvedi in New Delhi, and Kevin Krolicki in Singapore ; Editing by Dhanya Ann Thoppil, Savio D’Souza and Gerry Doyle)
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