India's Go First has been granted bankruptcy protection that will give it time to get back on its feet, but the move has put the country's fourth-largest airline at odds with lessors who want to repossess planes for missed rental payments.
Go First blames U.S. engine maker Pratt & Whitney for delaying engine supplies that led to the grounding of half its 54 Airbus A320neos. Pratt, part of Raytheon Technologies (RTX.N), says the claim is without merit, and the two sides are waging legal battles in India, Singapore and Delaware.
The dispute comes as Indian Prime Minister Narendra Modi touts the country's emergence as an aviation powerhouse.
BANKRUPTCY PROTECTION AND PILOT WOES:
* A tribunal in New Delhi on May 10 granted bankruptcy protection to Go First, imposing a moratorium on the recovery of planes and other assets.
* Go First's voluntary pursuit of bankruptcy protection to renegotiate contracts and debt marks a first for an Indian airline. CEO Kaushik Khona has hailed the tribunal's decision as "historic".
* A resolution professional appointed to run Go Airlines (India) has told staff in a townhall the airline needs to raise funds to resume operations.
* Many pilots from crisis-hit Go First are looking for new jobs. Early in May, they flocked to a hotel near Delhi for walk-in interviews.
FIGHT WITH PRATT, LESSORS:
* Go First has approached a Delaware court to enforce an arbitration order won in Singapore the requires Pratt to supply spare engines. Pratt is opposing the order, saying it now faces much higher risks after the Indian airline sought bankruptcy protection.
* Go First blames problems with Pratt's geared turbofan (GTF) engines for the crisis.
* Pratt has argued Go First failed because of "its own poor management and events like COVID".
* The world's second largest aircraft lessor, SMBC Aviation Capital, has warned the decision to block leasing firms from reclaiming Go First planes will spark a crisis of confidence in India's airline industry. Jackson Square Aviation and Bank of China Aviation have also expressed concern about getting their planes back.
* Leasing watchdog Aviation Working Group has put India on a watchlist with a negative outlook saying it failed to comply with international aircraft repossession norms.
GO FIRST OWNERS, LENDERS:
* Go First is owned by India's Wadia group. The Mumbai-based conglomerate was founded in 1736 by Loeji Nusserwanjee Wadia.
* India's Wadia Group is completely committed to the company and has no plans to exit it, the airline's CEO said on May 3.
* Lenders were not aware of the airline's plans to file for voluntary insolvency. Go First owes financial creditors 65.21 billion rupees ($798 million).
* Sources say lenders will classify their loans to the company as "non-performing" in the current quarter but are hopeful the collateral backing the loans will reduce the amount of any loss they have to take.
