 "SpiceJet plans to revive 25 planes as Go First files for bankruptcy")
A day after Go First suspended its flights and started the insolvency process, SpiceJet on Tuesday announced that it has mobilised a plan to revive 25 grounded planes.
SpiceJet has 72 aircraft in its fleet, out of which 31 are in “storage” and the remaining 41 are in service as on May 3, according to aviation analytics firm Cirium’s data. An aircraft that has not operated a single commercial flight in 30 days is considered to be in “storage”.
The sudden exit of Go First, which was operating about 200 flights per day, has left a vacuum in the Indian aviation market. SpiceJet is looking to fill this vacuum by bringing its grounded planes back to service.
SpiceJet said that funds to revive the planes will be drawn from the government’s Emergency Credit Line Guarantee Scheme (ECLGS) and better cash accruals.
The airline has already mobilised around Rs 400 crore for getting its grounded fleet back in the air, which will further enhance its top-line.
SpiceJet grounded the 31 planes due to lack of funds.
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On the other hand, 25 of Go First’s total 57 planes are grounded due to delay in engine supply from US-based Pratt and Whitney. As the number of grounded planes increased with time, Go First started facing cash crunch. This led to insolvency.
Ajay Singh, Chairman and Managing Director, SpiceJet, said, “We are meticulously working towards return to service of our grounded fleet back in the air soon. Majority of the ECLGS (emergency credit line guarantee scheme) funding received by the airline would be utilized for the same, which will help us capitalise and make the most of the upcoming peak travel season.”
Go First on Tuesday squarely blamed engine manufacturer Pratt & Whitney for the airline’s situation and suspended all flights till Thursday.
The engine manufacturer’s spokesperson said: “Pratt & Whitney is committed to the success of our airline customers, and we continue to prioritize delivery schedules for all customers. P&W is complying with the March 2023 arbitration ruling related to Go First. As this is now a matter of litigation, we will not comment further.”
Go First, which received Rs 3,200 crore of equity infusion in the past three years, said it was forced to move for insolvency after the engine manufacturer refused to comply with an award by an emergency arbitrator appointed in accordance with the 2016 Arbitration Rules of the Singapore International Arbitration Centre.
“The order directed Pratt & Whitney to take all reasonable steps to release and dispatch without delay to Go First at least 10 serviceable spare leased engines by April 27 and a further 10 spare leased engines per month until December, with the objective of Go First returning to full operations and achieving Go First’s financial rehabilitation and survival,” the airline said.
“Despite the emergency arbitrator’s order, however, Pratt & Whitney has failed to provide any further serviceable spare leased engines at all, and has stated that there are no further spare leased engines available for it to comply with the emergency arbitrator’s award,” the airline added.
Go First has claimed before an arbitral tribunal Rs 8,000 crore in compensation for the grounded planes.
The grounding of the planes has resulted in revenue lost and additional expenses of Rs 10,800 crore, it said.
Bankers to the company will hold a meeting on Wednesday for a review and discuss steps to be taken.