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Financial troubles have reached the breaking point for Indian low-cost carrier Go First. As reported by The Times of India, the airline has filed initial bankruptcy proceedings with the National Company Law Tribunal (NCLT).

Speaking to local media, Go First CEO Kaushik Khona referred to the proceedings as an "unfortunate decision," adding that it had been done to "protect the interests of the company."

Suspended services

On Tuesday, Go First announced it would be suspending all flights between May 3 and 5 due to "operational reasons," raising concerns for the future of the cash-strapped budget airline.

The carrier was later confirmed to have filed to enter the Corporate Insolvency Resolution Process, citing the ongoing dispute with Pratt & Whitney over engines for its grounded Airbus A320neo fleet. Over half of Go First's fleet has been grounded since December 2022 due to faulty Pratt & Whitney engines, costing the carrier around $1.32 billion in lost revenue. Despite talks with regulators and potential legal proceedings, neither party has been able to come to an agreement over the Raytheon-owned company's failure to supply spare engines.

A Go First Airbus aircraft taxiing to the runway.
Photo: Soos Jozsef/Shutterstock

In a public statement, the carrier outlined its grievances with the engine manufacturer, noting that if Pratt & Whitney were to comply with the initial emergency arbitrator’s ruling, it would be able to return to operations by either August or September this year.

“Go First deeply regrets the disruption and inconvenience that this will cause to its customers, travel partners, creditors, and suppliers, and in particular, to its own employees who have remained loyal to and grown with Go First over the years.

“However, even this collective and significant support has not sufficed to prevent the enormous damage caused by Pratt & Whitney’s defective and failing engines.”

Financial difficulties

Over the past 16 months, more than $360 million in funds have been injected to keep Go First operational by parent company Wadia Group, including a further $36 million payment made last month. Prior to its insolvency announcement, the carrier was reported to be in “cash and carry mode,” according to an oil marketing company official, leaving it on an unsustainable pay-per-flight arrangement with vendors.

Go First Airbus A320neo
Photo: Harsh - S | Shutterstock

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In April, Wadia Group revealed it was looking for a strategic partner to sell a stake in the carrier following a record financial loss of $218 million for the 2022 financial year. Wadia Group has denied rumors it wanted to exit Go First entirely and remained committed to infusing further funds into Go First.

Alongside its bankruptcy proceedings, the carrier will continue with legal action against Pratt & Whitney to the tune of $977 million. Go First has filed an emergency petition with Delaware’s Federal Court for the enforcement of financial relief awarded by the Singapore International Arbitration Centre (SIAC) earlier this year.

Go First has not responded to a request for comment at the time of publication.

What are your thoughts on Go First's bankruptcy? Has your flight been affected? Let us know in the comments.

Sources: The Times of India, Reuters, The Hindustan Times, Jagran