Go First blames Covid-19, Pratt & Whitney as losses double in FY22

Go First said its net loss more than doubled to Rs 1,807.91 crore in FY22 due to US-based Pratt and Whitney’s (PW) delay in supplying engines and multiple waves of Covid-19 that affected air travel, according to its regulatory filings last week reviewed by Business Standard.

The airline’s fleet comprises 54 aircraft and approximately 90 per cent of them are A320neo aircraft with PW engines. According to sources, around 20 A320neo aircraft of Go First are currently grounded due to delay in supply of engines.

Go First did not respond to Business Standard’s queries on whether it raised any claims on PW due to losses incurred on account of engine issues in FY22. PW also did not comment. The airline’s net loss increased from Rs 870.48 crore in FY21 to Rs 1,807.91 crore in FY22, the highest loss incurred by the carrier in at least the last eight years. 

In its regulatory filings last week, Go First said its operating and financial performance for FY22 continued to be impacted by “frequent failures in engines supplied by PW and the delay by PW in addressing the issues concerned”.

Further, the Directorate General of Civil Aviation (DGCA) mandated that all aircraft should have modified engines on both the wings, for which PW had confirmed to both the airline and the DGCA that they would provide modified engines within the time frame specified, it stated.

“Unfortunately, PW was unable to supply the modified engines to meet the obligations of the DGCA and also to supply adequate spare engines to mitigate the Aircraft on Ground (AOG),” it mentioned.

"The company is actively pursuing the matter with PW and is hopeful of early receipt of all pending engines returned for making the AOGs serviceable," Go First noted.

The budget carrier, which was previously known as GoAir, said the FY22 performance was also impacted by the Covid-19 pandemic resulting in truncated operations during most part of the year.

"The company witnessed the impact of second wave of Covid-19 in the Quarter 1 and third wave of Covid-19 in Quarter 3 and 4 of FY22," it mentioned.

Go First said it has been sanctioned additional loans of Rs 1,142 crore in FY22 from its bankers. "The company has also been servicing all the bank and statutory liabilities on time and has not defaulted or delayed any payments," it added.

Go First’s promoters -- the Wadia Group -- have arranged a total of Rs 1,320 crore of funds/bank facilities" and continued to strongly support the company. Additionally, the Wadia Group has infused equity of Rs 846 crore during FY22, it added.

Even as its net loss more than doubled in FY22, the company said in its filings that there was a "significant improvement" in its performance in FY22 as compared to FY21.

"The company's operating revenue increased by 92.64 per cent from Rs 2,171.75 crore in FY21 to Rs 4,183.77 crore in FY22," it mentioned.

With Covid-19 impact on a decline and vaccinations count increasing, the load factor has improved from 65 per cent in November 2020 to 77-78 per cent in November 2021 to almost 80 per cent in March 2022 to current domestic load factor of 84 per cent, it noted.