Lobbying by lessors, faulty Pratt & Whitney engines hurt India: Go First

Blames American firm for heavy losses, targets AWG

The Indian aviation sector has suffered huge losses due to faulty engines supplied by American firm Pratt & Whitney, with nearly 75 aircraft currently grounded across the nation, top executives of Go First Airlines said.  The grounding of aeroplanes due to issues with P&W engines has led to a spike in airfare, they said.

Asking Aviation Working Group (AWG) — an association of aircraft lessors, engine makers, and plane makers — to pressure P&W to meet its obligation to supply engines, they claimed its members via the lobby group were trying to “influence” the National Company Law Appellate Tribunal (NCLAT).

Aircraft lessors have moved the appellate tribunal after the National Company Law Tribunal (NCLT) admitted Go First’s voluntary plea to initiate an insolvency resolution process. Reacting to news that AWG has put India on a watch list for not deregistering Go First aircraft upon the termination of their leases, the airline executives said AWG would be better served by addressing the huge losses suffered by local airlines due to faulty P&W engines supplied to Go First and IndiGo.

“These companies (engine makers and aircraft manufacturers) cannot wash their hands of their liabilities after supplying sub-standard engines or aircraft, which led to huge losses for local airlines,” said Varun Berry, chairman of Go First Airlines, on Sunday.

AWG members include Boeing, Airbus, Pratt & Whitney, Rolls-Royce, and lessors such as SMBC Aviation.

In a separate news conference, Ryan Weir, vice-president (sales and marketing for India), Boeing Commercial Airplanes, raised concern about the impact on the lease rates in India if the current order (on repossession of aircraft) stands.

"His (Weir) concern would be better addressed to P&W and his other co-members whereby they are persuaded to meet their obligation to supply engines and aircraft that perform and not cause the grounding of hundreds of aircraft as was the case in the past," a Wadia group source said.

The Airbus NEO (new engine options) with P&W engines, sold on the plank of higher fuel efficiency, also failed.

“Rather than making statements on India, AWG should ask its member P&W to abide by the rules of international laws and honour two arbitration awards and address the cause that has taken Go First to the NCLT,” he said, adding the AWG members are using the lobby body in their bid to “influence the Indian appellate tribunal” just before the crucial hearing, scheduled this week.

P&W failed to supply engines to Go First despite a Singapore arbitration ruling that at least 10 engines should be supplied to the airline every month from April 28 this year, so that every month five additional aircraft be made serviceable and all grounded aircraft be airborne by September this year.

At the time of its bankruptcy filing, 28 aircraft of Go First were grounded as P&W refused to supply engines.

Apart from Go First, around 30 aircraft of IndiGo and 15 aircraft (turboprop engines) of SpiceJet are grounded due to issues with P&W engines.

Go First suspended all flights from May 3 after filing a voluntary insolvency application with the NCLT, which appointed a resolution professional to oversee the operations of the company and help it revive. Aircraft lessors then moved the NCLAT to appeal the NCLT order, which did not permit lessors to take their aircraft back.

Berry said despite two orders from the Singapore arbitration court, P&W refused to supply engines, leading to the airline filing for bankruptcy. Later, the airline moved the court in Delaware, US, to enforce the order.

“The entire Indian aviation sector is hit due to sub-standard products supplied by the engine maker. The cause of the problem is that these engines fly only 3,000 to 3,500 to 4,900 hours instead of 15,300 hours, thereby reducing the life of the engines requiring maintenance from 5 years to 12 to 15 months," Berry said.

P&W earlier said it would defend itself against the charges made by Go First in the court. "Go First’s allegations that Pratt & Whitney is responsible for its financial condition are without merit. Pratt & Whitney will vigorously defend itself against Go's claims, and is pursuing its own legal recourse,” a P&W spokesperson had told media earlier.

Top Go First executives said the Indian government asked P&W almost 3 years ago to set up an MRO (maintenance, repair and operation) centre in India but no action has been taken, so far, by the engine maker.

"P&W appears to have withdrawn from India after supplying sub-standard engines and it's Indian airlines that are bearing the cost,” Berry said.

Go First looking to start ops soon

A senior Go First executive said the airline has access to around Rs 300 crore of funds and that it is looking forward to starting operations as soon as possible.

The Wadia group airline's plea for insolvency was admitted on May 10 and Abhilash Pal was appointed as interim resolution professional. Pal has already invited claims from creditors which will be received by May 23. A business plan too is being prepared.

"Efforts are on to restart operations as soon as possible,” said the executive.

The promoter Wadia group infused Rs 290 crore into the airline in the last week of April. Under the government’s emergency credit line guarantee scheme, the airline can draw an equivalent amount in loans from banks.

"While a Rs 82-crore loan has been received under ECLGS, the balance Rs 208 crore has been sanctioned. If the committee of creditors approves, this amount can be drawn. There are certain receivables from charter flights undertaken by the airline and also refunds due to airline. So aroundRs 300 crore will be available to the airline to restart operations," the executive said.

Further, the executive said: “Pilots are keen to continue working with us. We have informed them there will be no salary cut and salary will be paid once the business plan is approved by the committee of creditors."