Go First, a Wadia Group airline, formerly known as Go Air, is going through some serious turmoil as the budget low cost brand has suspended all its flights till May 12, while stopping the bookings further in the month. The issue erupted when Go First announced to file an application of voluntary insolvency proceedings with NCLT. The airline blamed engine maker from the US Pratt & Whitney (P&W) for not supplying required engines for its fleet of Airbus A320 aircraft. This resulted in grounding of half of the airline's fleet, impacting the cash flow.
Recently, sources working closely with Pratt & Whitney, in an interview with PTI, blamed Go First for financial irregularities and said the airline has a "lengthy history of missing its financial obligations." Go First, now, in a detailed press release, explained how the crisis unfolded, blaming the engine maker for the troubles for the airline? Here's a deeper understanding of the issue that led to the Go First bankruptcy.
Why Go First Selected Pratt & Whitney?
Airbus, the plane maker in fleet with Go First, certified two engines to power the new A320neo: Pratt’s PurePower PW1127G-JM engine, and a CFM engine. Pratt & Whitney touted itself as the next generation engine, with the expectation that each Engine would have a lifespan of approximately 15,300 hours on wing before its first full interval shop visit. The expected lifespan of the Engines was an important consideration for Go First to go ahead with Pratt & Whitney engines.
Moreover, Pratt offered better commercial terms compared to its competitor which included financing via their affiliate (UTF) for the Pre Delivery Payments. Pratt promised through a signed Side letter in 2012 that if an Engine failed within its initial 6,000 hours (or 4,200 take-off and landing cycles) of normal operation, Pratt would repair and recondition that Engine at no charge to Go First.
Understanding Problem With P&W's GTF Engines
Pratt & Whitney's GTF Engines have suffered from a multitude of defects and a high rate of failure effectively from day one. There were software and combustor problems and as early as September 2016, less than four months from entry into service of the first GTF Engine installed on a First Batch Aircraft, Go First had to remove a GTF Engine due to “Combustor Chamber” distress.
Pratt & Whitney engine problems has been an industry wide issue and multiple airlines are suffering from it. As per Go First, these GTF engine were developed on an unproven, ‘new’ technology platform prematurely tested and forced into the market to capture airline attention with performance stats that were never achieved. The engine problems included issues with the Engines’ software, start-up times, starter, main gear box, and fan blades, but the key issues were with the combustor (i.e., there was erosion in the combustion chambers, known as ‘combustor distress’).
While initially Aircrafts on Ground were sporadic, Aircraft on Ground (AOG’s) began spiking as a result of a fault with the Low Pressure Turbine (“LPT”) blades. In Nov’2019 Go First had an AOG rate of approximately 3.8% for its existing fleet of First Batch Aircraft. But that AOG rate then increased sharply, reaching 23% in January 2020 and remaining at elevated levels through March 2020.
Director General of Civil Aviation (DGCA) investigated these technical issues, “to review the premature engine removals of PW1100G-JM engines installed on Airbus A320 Neo Aircraft”. The DGCA, in statement, said, "Post induction of A320 Neo aircraft fitted with PW1100G engines into service, following significant technical issues have been experienced on these engines worldwide:
a) Combustion Chamber distress-Block B & Block C
b) Bearing Pre Mod & Post Mod failures
c) N2 transient vibration
d) Low Pressure Turbine (LPT) failure
e) HPC (High Pressure Compressor) rear knife edge seal failures
f) Gear Box failures
The combustor (which is in the hot section (i.e., at the front) of an aircraft engine) degraded much faster than it should have, causing premature failures and engine shutdowns, said Go First. Despite multiple modificatrions, the issues still persist with its combustor and as on December 2022, 24 GTF Engines with Block D modification had been removed in India alone due to HPT stage 1 erosion.
Between 2016 and February 2023 Go First carried out 510 GTF Engine removals: 289 Engine Changes as a result of at least 28 different defects, and 221 Engine Swaps. 15% of total Pratt & Whitney GTF powered aircrafts are grounded because of faulty engines globally (178 aircrafts are grounded out of 1,219 aircrafts as of March 2023).
The most affected region is India with 65 grounded aircrafts out of 178 aircrafts. Out of total 60 global customers, only 4 customers have grounded aircrafts in excess of 25% and 2 of them are Indian customers.
Grouding Of Go First Aircrafts
As per Go First, they made significant efforts over the years to cooperate with Pratt in an attempt to reach a solution to the serious, chronic issues. The grounding of close to 50% of its fleet due to the serial failure of Pratt & Whitney’s engines, while it continued to incur 100% of its operational costs, has set Go First back by Rs 10,800 crores in lost revenues and additional expenses.
Go First has paid Rs 5,657 crores to lessors in the last two years of which approximately Rs 1600 crores was paid towards lease rent for non-operational grounded aircraft. Go First commenced an arbitration against Pratt & Whitney under the 2016 Rules of the Singapore International Arbitration Centre (SIAC) – seeking compensation in excess of Rs 8000 crores and other final relief – as well as to seek interim, emergency relief.
As per the airline, in an award dated 30 March 2023, the Emergency Arbitrator found that Go First’s current financial position was due in large part, if not wholly, to the number of grounded aircraft caused by the unavailability of Pratt & Whitney’s engines. The airline further says that had Pratt & Whitney complied with the emergency arbitrator’s award, all of Go First’s aircraft would have been operational by September 2023.
