India: Go First files for bankruptcy and temporarily halts operations
As a result of its liquidity problems, low-cost carrier Go First, based in Mumbai, India, filed for bankruptcy and momentarily halted its operations. The company filed the petition with the National Company Law Tribunal in New Delhi today.
As reported by Reuters, the airline blamed the situation stemming from problems with Pratt & Whitney engines as the trigger. In recent weeks, supply chain problems and delays in maintenance, repair and overhaul (MRO) work on powerplants have forced nearly half of its fleet to be grounded.
See also: Pratt & Whitney engine crisis in India: 60 Airbus remain grounded
Go First highlights difficulties with Pratt & Whitney engines
According to the company, the filing with the competent court came after the engine manufacturer refused to comply with an order to release components that would have allowed it to resume normal operations.
Company sources quoted by Reuters said the situation resulted in losses of 1.32 billion dollars, taking into account lost revenues and additional expenses. In a press release, Go First explained that it is no longer in a position to meet its financial obligations.
It is the first occasion that one of India’s big airlines has filed for bankruptcy since the collapse of Jet Airways in 2019. For now, Go First cancelled its scheduled services between May 3 and 5 due to «operational reasons». However, it said the filing does not mean its final end.
The potential impact on the Indian market
According to analysts quoted by Reuters, Go First had a market share of 8.9% last year.
The Indian airline market is one of the most dynamic and fastest growing in the world. Activity and competition are now intensifying, with demand reaching levels close to those seen in 2019. Projections indicate that the trend will continue for the foreseeable future.
In this context, the discontinuation of Go First’s operations could benefit its competitors and lead to an increase in fares as a result of the lower offer available.
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