Tuesday, July 04, 2023

Not Just Funding, Go First's Operations Also Depends On Singapore Court Ruling

As bankers of the defunct Go First Airlines agree to provide fresh funds to revive the company, the outcome of an impending order from the Singapore arbitration court holds great significance for the airline's survival. 

Sources familiar with the process have stated that if the court does not grant relief to Go First and direct Pratt & Whitney (P&W) to replace the faulty engines, the airline will be unable to operate, potentially jeopardising the entire recovery process. 

The Singapore International Arbitration had previously instructed P&W to deliver approximately 20 engines by December 2023. However, the engine manufacturer has challenged this directive, citing non-payment by the airline and the ongoing global supply chain shortage. P&W claims that the airline owes them over USD 100 million, as mentioned in their petition. 

According to an individual familiar with Go First's business plan, current trends indicate that at least six engines may fail by November 2023. 

According to another individual familiar with the matter, the Singapore arbitration case hearing concluded in the final week of June. A decision is anticipated in the upcoming week, and it will determine whether Go First will have any engines whatsoever, which is a fundamental necessity for the airline to recommence its operations. 

Last week, a leading media house reported that the committee of creditors (CoC) for Go First Airlines approved interim funding of Rs 425 crore in principle, aiming to facilitate the airline's swift return to service. 

However, this funding is contingent on receiving clearance from the aviation regulator, DGCA (Directorate General of Civil Aviation). The permissions associated with the funding include DGCA's approval for the airline to operate, and the regulator will conduct a security audit to assess the airline's preparedness. According to another person familiar with the situation, if the airline lacks engines, it will be unable to operate, without any room for ambiguity.

04/07/2023 Business World

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