A government bailout of Go First cannot be considered unless the issue of supply of engines with Pratt & Whitney is sorted out, minister of state for civil aviation VK Singh said on Tuesday.
“The problem with Go Air (Go First) is that their flights are run on engines of Pratt & Whitney, which is facing management issues since Covid 19, so engine manufacturing is not happening at the pace that it should have,” Singh told a news agency. “What can be done about a bailout? Where will P&A get engines?” Singh asked. He said that a bailout can happen only when something can be done about the engines.
As reported earlier, the Directorate General of Civil Aviation (DGCA) has already directed Go First to halt ticket sales and bookings till further orders. Meanwhile, the airline has sought a speedy order from the National Company Law Tribunal (NCLT) on its plea for an insolvency resolution.
The regulator has issued a show-cause notice to Go First for its “failure to continue the operation of the service in a safe, efficient and reliable manner”. “The airline operator has been asked to submit their reply within 15 days of the receipt of this notice, and further decision on the continuation of their ‘Air Operators Certificate’ (AOC) will be taken on the basis of the reply submitted by them,” the regulator said.
In its plea before the NCLT, Go First has cited attempts by lessors to recover their aircraft but the NCLT reserved its order on the airline’s plea.
During the hearing last Thursday, while reserving its order on the airline’s plea for an interim moratorium, the NCLT noted that there was no such provision in the Insolvency and Bankruptcy Code and that only an absolute moratorium was possible.
Go First chief executive officer Kaushik Khona said on Saturday that the airline was in a position to resume flights within a week if the bankruptcy court restrained lessors from re-possessing the planes. With half its Airbus A320 Neo fleet grounded due to engine troubles, the carrier has lost `10,800 crore in revenue. Should the tribunal allow for a moratorium, it would keep lessors from reclaiming their planes and creditors from encashing guarantees and letters of credit, Khona said.
The airline also wants the DGCA and AAI to not cancel any departure and parking slots allotted to the company.
Last week, aircraft lessors approached the DGCA to deregister and export 20 aircraft under the Irrevocable Deregistration and Export Request Authorisation (IDERA) norms. Among these were CDB Aviation, SMBC Aviation Capital and Sonoran Aviation Company. These norms require the regulators to deregister aircraft in cases of lease rental defaults and allow lessors to repossess them within five working days of receiving a request. Following the due process, the DGCA has published applications filed by lessors under the IDERA norms on its website. The Wadia Group-owned airline has liabilities worth around `11,000 crore.