Go First insolvency: SIAC orders Pratt and Whitney to provide airline with 5 aircraft engines per month from August to December

A Singapore International Arbitration Centre (SIAC) tribunal has asked American engine manufacturer Pratt and Whitney to take all possible steps to  immediately start providing Go First Airlines at least five engines a month starting from August 1 to December 31, 2023.

The tribunal clarified that this order would not apply to any third party engines which terminated their leases before the moratorium triggered on the airline company’s assets when it voluntarily filed for insolvency on May 2.

“The respondent (P&W) must take all reasonable steps to release and dispatch to the claimant (Go First Airlines), without delay as they become available, five engines per month immediately after any engine becomes available and commencing, at latest, on 1 August 2023 and continuing through 31 December 2023, subject to further orders of this Tribunal. This shall not apply to any third-party engines that are in the MRO process, as to which the engine lessors have communicated contrary disposition directions based on their pre-moratorium termination of leases with claimant,” the order reads.

SIAC also directed Go First to provide an undertaking within seven days from the resolution professional Shailendra Ajmera ensuring that any costs incurred by P&W in complying with this order will get the highest priority in repayment in the event Go First is forced into liquidation proceedings. 

It directed both parties to provide the tribunal with quarterly updates on the progress of the resolution proceedings in compliance with its order and if any other relevant circumstances emerge.

Go First Airlines had initiated arbitration before the SIAC in March this year alleging that P&W had failed to provide engines as agreed in the contract. 

A SIAC tribunal had passed an emergency award asking P&W to supply 20 engines to Go First Airlines which were lying at its maintenance and repair facility by December 2022. 

It also directed P&W to recover the 44 defunct engines of Go First’s fleet, spread across various airports in India, for more than 270 days.

The airline also filed a plea against P&W in a federal court at Delaware, United States seeking enforcement of the arbitral award.

The award of March 30 in favour of Go First Airlines directed P&W to provide the airline with engines, failing which there was a risk of the airline shutting down.

Meanwhile, the airline company voluntarily initiated the insolvency process as it was experiencing losses due to alleged faulty engines supplied by P&W.

It claimed that the grounding of its aircrafts increased from 31% in 2020 to more than 50% in April 2023 and this cost the company a loss of over ₹10,800 crore.

The NCLT at Delhi admitted the plea on May 10 and declared full moratorium for the company.

The Delhi High Court on July 5 allowed aircraft lessors access to the planes they had leased out to Go First Airlines and to carry out maintenance work on them.