Go First files for bankruptcy citing “faulty engines”

Indian carrier Go First airways filed for bankruptcy with the National Company Law Tribunal, citing that crisis was triggered by the failure of Pratt & Whitney engines that power its fleet

Wadia group-owned Go First, formerly known as Go Air, announced on Tuesday that it has filed for insolvency and will no longer be able to meet its financial obligations, citing “faulty engines” from US manufacturer Pratt & Whitney for the grounding of 50 percent of its fleet.

According to Kaushik Khona, the CEO of Go First, the airline has submitted an application with the National Company Law Tribunal (NCLT) for voluntary insolvency resolution procedures.

This is India’s first significant airline failure since Jet Airways declared bankruptcy in 2019, highlighting the severe competition in a market dominated by IndiGo and the recent merger of Air India and Vistara under the Tata group.

The Wadia Group was said to be in discussions to sell its majority ownership or altogether abandon the company. Employees were supposedly taken off guard since they learned about the suspension in everyday operations from local media first. Their wages have been allegedly delayed for several months.

According to Reuters, the airlines’ lenders were unaware of the insolvency petition. They are due to meet and discuss the airlines’ next steps. According to a bankruptcy petition with the National Company Law Tribunal, Go First’s total debt to financial creditors was 65.21 billion rupees as of April 28. According to the filing, Go First Air has not defaulted on any of these payments as of April 30, according to news agency Reuters.

Following this announcement of Go First filing the insolvency of its airlines, the shares of InterGlobe Aviation, commonly known as (IndiGo), Jet Airways, and SpiceJet rose to 8% in early trading on Wednesday. Shares of aviation companies jumped up to 8% as of today, after Wadia Group-owned Go First filed for bankruptcy. According to the filing, Go First Air has not defaulted on any of these payments as of April 30, as per Reuters. In addition, a dramatic drop in worldwide crude oil prices aided the aviation counters. InterGlobe Aviation shares rose 8% to Rs 2,235.95 on Wednesday, before closing at Rs 2,174.60.

 

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