Lessors of cash-strapped Go Airlines India Ltd faced a major setback on Monday as the National Company Law Appellate Tribunal (NCLAT) upheld the initiation of insolvency proceedings against the low-cost carrier.
Go First's lessors including SMBC Aviation Capital Ltd, GY Aviation and SFV Aircraft Holdings moved the appellate tribunal after the Delhi bench of the National Company Law Tribunal (NCLT) admitted the insolvency application filed by the budget carrier.
The admission of the insolvency case brought Go First's fleet under moratorium. Lessors will now need to submit claims to the resolution professional.
Ireland-based lessors have sought de-registration of 44 aircraft operated by Go First.
According to data released by the Directorate General of Civil Aviation (DGCA), Go First's domestic market share fell to 6.4% in April from 6.9% in March. The airline flew 8.29 lakh passengers in April compared with 8.95 lakh flyers in March.
The budget carrier's on-time performance at metros was the lowest in April at 41.7%, as per DGCA data.
The Wadia Group-owned airline last week cancelled all scheduled flights till May 26 citing 'operational reasons'. Go First said it will issue a full refund for the flight cancellations to the original mode of payment. "The company has filed an application for immediate resolution and revival of operations. We will be able to resume bookings shortly," the beleaguered carrier said.
Go First has blamed 'defective' and 'failing engines supplied by Pratt & Whitney for its financial troubles. Go First earlier said the grounding of close to 50% of its A320neo fleet due to the 'serial failure' of Pratt & Whitney engines has set the airline back by ₹10,800 crore in lost revenues and additional expenses.
"The percentage of grounded aircraft due to Pratt & Whitney's faulty engines has grown from 7% in December 2019 to 31% in December 2020 to 50% in December 2022," the budget carrier said.
Go First claims it was forced to file for insolvency at the NCLT after Pratt & Whitney, the engine supplier for Go First's Airbus A320neo aircraft fleet, refused to comply with an award issued by an emergency arbitrator. The order directed Pratt & Whitney to release and dispatch without delay at least 10 serviceable spare leased engines to Go First by April 27, 2023 and a further 10 spare leased engines per month until December 2023.
The airline has also filed an emergency petition in Delaware court against Pratt & Whitney, seeking enforcement of two arbitral awards.
The 17-year-old airline had a debt of ₹3,513 crore as of March 2023.