SINGAPORE- Creditors and Banks have agreed to inject fresh funds into the temporarily halted carrier, Go First (G8), but the fate of the carrier hinges on an upcoming order from the Singapore arbitration court.
Without relief from the court and a directive for Pratt & Whitney (P&W) to replace faulty engines, the airline’s ability to fly hangs in the balance, jeopardizing the entire recovery process, according to sources familiar with the matter told ET.
Go First Need Singapore Court Clearance
Challenges surrounding engine replacement and pending payments have led to uncertainty for Go First Airlines. The Singapore International Arbitration Award had initially instructed P&W to deliver approximately 20 engines by December 2023.
However, P&W challenged the order, citing non-payment by the airline and the unremitting global supply chain depletion. The engine manufacturer claims that Go First owes them over $100 million, as stated in their petition reviewed by ET.
According to an informed source, the airline’s current trends indicate that at least six engines could fail by November 2023.
The recent conclusion of the hearing in the Singapore arbitration case sets the stage for an upcoming court order to determine whether Go First will have any operational engines, which is essential for the airline to resume flying.
Restart Funds
Last week, ET reported that the committee of creditors (CoC) for Go First Airlines provisionally approved funding of ₹425 crores to facilitate the revival of the grounded carrier.
However, this funding is contingent upon the airline obtaining clearance from the aviation regulator DGCA. The DGCA’s approval and a security audit are prerequisites for the airline to resume operations.
“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.” added Source
“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,” explained a familiar source.
In addition to the Singapore court case, Go First Airlines has also filed a lawsuit against P&W in a Delaware federal court to enforce an arbitration award that mandates the provision of engines.
Failure to comply with this directive could result in the airline’s shutdown. P&W had previously challenged the order in the Singapore-based tribunal, awaiting a final decision.
Once the tribunal’s decision is rendered, Go First will need to pursue enforcement through the Delaware court.
Pratt and Whitney Engine Troubles
Go First Airlines’ A320 Neo aircraft, powered by P&W’s geared turbofan engine, have experienced significantly reduced life expectancy in India’s dusty and harsh conditions compared to the promised performance.
Engines have had to be removed from the wing before reaching an average of 7,000 flight hours, falling well below the projected 12,000-hour lifespan.
With outstanding debts totaling more than ₹6,500 crores, including ₹1,987 crores owed to the Central Bank of India, Go First Airlines faces significant financial challenges.
The Central Bank of India holds outstanding loans, including approximately ₹650 crores in post-Covid emergency lines of credit.
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