NCLT to hear Go First plea for insolvency proceedings on Thursday; airfares likely to rise as airline cancels flights

As uncertainty looms over the fate of Go First, the National Company Law Tribunal (NCLT) will hear on Thursday the cash-strapped airline's plea for voluntary insolvency resolution proceedings while airfares are likely to spurt in certain routes due to the carrier cancelling flights.

A day after the budget carrier cited grounding of more than half of the fleet due to non-supply of engines by Pratt & Whitney as the reason for its financial crunch, the US-based engine maker on Wednesday said it is complying with the arbitration order regarding the airline and continues to prioritise delivery schedules for all customers.

Frustrated passengers who had booked Go First flights complained about the sudden cancellation of flights while travel agents' grouping TAAI flagged concerns about the possibility of losing money due to the crisis at the budget airline. It has cancelled flights for three days starting Wednesday.

The Wadia group-owned airline's plea for initiation of insolvency proceedings was mentioned before NCLT's Delhi bench-headed by President Justice Ramalingam Sudhakar on Wednesday and the bench agreed to an urgent hearing on Thursday.

Go First is the second major scheduled airline after Jet Airways to seek resolution under insolvency proceedings.

In a message to employees on Tuesday, Go First CEO Kaushik Khona said the airline has been crippled by recurring P&W engine troubles and assured that the carrier is doing everything possible to navigate the situation with utmost care and concern for all staff.

Sources close to P&W also claimed that Go First has a lengthy history of missing its financial obligations to the engine maker.

With a depleted fleet size, Khona said in the message that the airline is not able to generate revenue for the payment of lessors, and as a result, they are taking coercive steps against the company by invoking letters of credit, grounding notices and demanding return of aircraft.

''...The company has been crippled by the recurring Pratt & Whitney engine troubles. Pratt & Whitney's defiance in not supplying spare engines as instructed by the Emergency Arbitrator has grounded your company to a halt,'' he told the staff.

Against this backdrop, Khona said there was no other option other than seeking voluntary insolvency resolution proceedings to preserve the company's operations by taking effective steps.

Addressing the employees as ''Go Getters'', the CEO said, ''we want to reassure you that we are doing everything possible to navigate this situation with the utmost care and concern for all employees''.

About the Go First situation, Travel Agents Association of India (TAAI) President Jyoti Mayal said, ''it is bad for the (airlines) industry... It is such a fragile industry... we lost crores of rupees in Kingfisher Airlines, in Jet Airways and we have another one going into insolvency (proceedings).'' Mayal said that right now there is demand for air travel as it is holiday time and ''we do expect fares going up in sectors it (Go First) was flying. In the coming weeks, fares are likely to go up''.

In a statement, TAAI, which has around 2,800 members, expressed concern over the sudden cancellation of flights by Go First.

''The cancellations and refunds of tickets to its members and consumers have raised concerns at TAAI, who fear that travel agents will be adversely affected, presenting a significant financial blow as they struggle to revive post Covid,'' it said.

The airline, which has been grappling with engine issues since January 2020, in a statement on Tuesday said it has been forced to move the NCLT as P&W refused to comply with an order issued by the Singapore International Arbitration Centre (SIAC), an emergency arbitrator.

The arbitrator had ordered P&W to take all reasonable steps to release and dispatch without delay to the airline at least 10 serviceable spare leased engines by April 27 and another 10 spare leased engines per month until December 2023, as per the statement.