In what can be seen as a relief for grounded airline Go First, the Singapore International Arbitration Centre (SIAC) has directed aircraft engine maker Pratt & Whitney (P&W) to release and dispatch five engines every month to the carrier starting August 1 until December 31.
Go First, which is currently undergoing insolvency proceedings, stopped commercial operations since May 3. The Mumbai-based, Wadia group airline, which filed for voluntary insolvency, blamed P&W for the same stating that the US-based engine maker refused to comply with an award issued by the emergency arbitrator earlier.
“The respondent (P&W) must take all reasonable steps to release and dispatch to the claimant (Go First), 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 December 31 2023, subject to further orders of this tribunal,” the tribunal said in its order.
The development comes as a relief for Go First because it is trying to resume operations and has approached the Directorate General of Civil Aviation for approval. The airline has sought an interim funding of around `450 crore from banks, for which the committee of creditors has given an in-principle approval.
The tribunal further added that the order “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 Go First.”
When contacted a P&W spokesperson said, “Pratt & Whitney respects the interim application ruling and will comply with the order until it is otherwise modified. We look forward to vigorously defending ourselves during the merits proceedings where the business and legal issues will be determined and resolved.”
Earlier, in an interim order delivered in March, SIAC had directed P&W to dispatch at least 10 serviceable spare leased engines by April 27, 2023 and a further 10 spare leased engines per month until December 2023.
The tribunal ordered both parties to provide it with quarterly updates on the progress of the resolution proceedings, compliance with the latest order, and any other relevant circumstances. It also allowed both the parties to apply for further reconsideration of this order.
The troubled airline had sought compensation of around Rs 8,000 crore in the arbitration, which it had hoped, if awarded, would be able to address the liabilities of all its creditors. The tribunal also added that the interim relief granted earlier in the Emergency Award and the Supplemental Award ceases to be of effect immediately. In addition all other relief sought arising out of or in connection with the vacation application stands dismissed.
The percentage of Go First’s grounded aircraft due to faulty engines has grown from 7% in December 2019 to 31% in December 2020 to 50% in December 2022.
Last financial year Go First recorded its biggest-ever loss at `1,808 crore on a revenue of `4,184 crore which was the lowest since 2018. The company has a negative net worth of `3,222 crore, as per disclosures made by it for FY22. The airline had also claimed that it suffered a loss of `10,800 crore because of the engine failure and non-supply of engines by P&W.