Go First Bankruptcy: Flight suspended till June 22; meanwhile Wadias move court against Pratt & Whitney

GoFirst has announced an extension of its flights suspension until June 22nd. This decision comes amidst the ongoing insolvency case faced by the airline.

Meanwhile, Wadia Group, the majority stakeholder in the airline, plans to pursue a protracted legal battle against US engine maker Pratt & Whitney (PW). The Wadia Group alleges that PW failed to identify the technical irregularities with engines that ultimately led to GoFirst's financial woes.

The Mumbai-based founders of the airline have approached a Delaware court in the US to enforce an arbitration award in Singapore against PW.

While GoFirst's suspension of flights is an immediate setback, the legal battle initiated by the Wadia Group signals a long-term commitment to holding responsible parties accountable. This case could potentially have wider implications for manufacturing firms and the overall corporate governance landscape in India.

Background of the matter

On 2 May, GoFirst declared bankruptcy, stating that its financial situation was unsustainable. This was primarily due to 30-50% of its aircraft fleet being out of service since 2020 because of either faulty engines or the absence of spare engines.

The airline's insolvency request was accepted by the National Company Law Tribunal (NCLT) on 10 May, resulting in a freeze on the airline's assets and aircraft. However, the lessors of the aircraft opposed the acceptance of the request as they wanted the aircraft to be deregistered.

PW (the engine maker) has claimed that the airline requested preferential treatment by asking them to prioritize supplying engines to Go First over other customers. Additionally, PW has previously accused the airline of not making payments for maintenance services.