NCLT grants Cash-strapped Go First airline gets bankruptcy protection

An Indian tribunal on Wednesday granted bankruptcy protection to Go Airlines (India) Ltd, a move that will help the country’s fourth-largest carrier attempt to revive itself but complicate foreign lessors’ efforts to repossess their planes. The low-cost carrier, recently rebranded as Go First, has said its financial crisis was sparked by “faulty” Pratt & Whitney engines that grounded about half its 54 Airbus A320neos. The US engine maker, part of Raytheon Technologies, has called the claims without evidence.The National Company Law Tribunal said an interim resolution professional will takeover management of the airline with immediate effect and ordered a moratorium on Go First’s assets and leases.

Go First’s Chief Executive Officer Kaushik Khona, who was present as the order was read, told reporters the decision was “historic”.This is the first time an Indian airline has voluntarily sought bankruptcy protection to renegotiate contracts and debt. The move could, however, complicate repossession efforts by lessors, which have in recent days filed requests with India’s aviation regulator for the return of about 40 Go First planes after rental payments were missed. Indian law prohibits any such recoveries once bankruptcy proceedings are initiated for a company, according to lawyers and industry sources. Go First was established in 2005 under the leadership of business tycoon Nusli Wadia. The airline has stated that the Pratt & Whitney engines installed on its A320neo aircraft had degraded at a faster rate than anticipated, resulting in premature failure.According to the airline, it had to replace over 500 Pratt GTF engines from 2016 until February 2023. As a result, several aircraft had to be taken out of service, leading to losses worth Rs 10,800 crore ($1.3 billion) for the airline.