NCLT Lists GoFirst Insolvency Plea for Hearing Tomorrow

NCLT will hear the insolvency plea of ​​GoFirst on May 4.

Delhi’s National Company Law Tribunal has agreed to hear cash-strapped airline GoFirst’s voluntary insolvency plea on Thursday.

GoFirst lawyers referred the request before NCLT on May 3, seeking an emergency listing. The tribunal agreed to list the cases accordingly.

On May 2, the airline announced it had applied for voluntary insolvency proceedings with the National Company Law Tribunal (NCLT) in Delhi.

The airline’s CEO, Kaushik Khona, announced shortly after the Wadia Group airline said it would suspend flight operations from May 3-4 due to “severe financial constraints”. Flights will restart once NCLT accepts the application, Khona said.

Explaining why it is facing a cash crunch, Khona told news agency PTI that the airline had grounded 28 planes, more than half of its fleet, due to Pratt & Whitney (P&W) not supplying engines.

GoFirst said it had to take this step to protect the interests of all stakeholders. It was forced to take this step after successive failures grounded nearly 50% of its A320neo fleet despite promoters pumping a massive Rs 3,200 crore into the airline over the past three years. Pratt & Whitney’s engine cost Go First Rs 10,800 crore in lost revenue and additional costs.

“GoFirst had to take this step due to the increasing number of failed engines supplied by Pratt & Whitney’s International Aero Engines, LLC, which resulted in GoFirst having to ground 25 aircraft (equivalent to approximately 50% of its Airbus A320neo fleet) as of May 1, 2023. The percentage of aircraft grounded due to Pratt & Whitney engine failures increased from 7% in December 2019 to 31% in December 2020 to 50% in December 2022. While Pratt & Whitney made multiple assurances it had repeatedly made over the years has repeatedly failed to deliver,” the loss-making airline said in a statement.

“This is an unfortunate decision (to file for voluntary insolvency proceedings), but it must be done to protect the company’s interests,” Khona said.

Pratt & Whitney, the exclusive engine supplier for GoFirst’s Airbus A320neo aircraft fleet, refused to comply with a decision issued by an emergency arbitrator appointed following the Singapore International Arbitration Centre’s (SIAC) 2016 arbitration rules. It had directed Pratt & Whitney to take all necessary steps to release and dispatch without delay to GoFirst at least 10 serviceable spare leased engines by April 27 and a further 10 spare leased engines per month until December 2023, aiming GoFirst returning to entire operations and achieving its financial rehabilitation and survival, the airline said.

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