A Singapore International Arbitration Centre (SIAC) tribunal has instructed American engine manufacturer Pratt and Whitney (P&W) to take immediate action to supply at least five engines per month to Go First Airlines from August 1 to December 31, 2023.
The tribunal clarified that this order would not apply to any third-party engines that terminated their leases before the moratorium on the airline’s assets, triggered when it voluntarily filed for insolvency on May 2.
According to the order, P&W must make reasonable efforts to release and dispatch engines to Go First Airlines as they become available, commencing no later than August 1, 2023, and continuing until December 31, 2023. This order is subject to further directions from the tribunal. However, it does not extend to any third-party engines that are in the maintenance, repair, and overhaul (MRO) process, as long as the engine lessors have provided contrary disposition directions based on the termination of leases before the moratorium.
SIAC also directed Go First to provide an undertaking within seven days, through the resolution professional Shailendra Ajmera, ensuring that any costs incurred by P&W in complying with the order receive the highest priority for repayment in the event of Go First being forced into liquidation proceedings.
Both parties were also directed to provide quarterly updates to the tribunal on the progress of the resolution proceedings in accordance with the order, as well as any other relevant circumstances.
Go First Airlines initiated arbitration proceedings before SIAC in March, alleging that P&W had failed to provide engines as stipulated in their contract. In response, a SIAC tribunal issued an emergency award in December 2022, requiring P&W to supply 20 engines to Go First Airlines. The award also ordered P&W to recover 44 non-operational engines from Go First’s fleet, which had been idle at various airports in India for over 270 days.
Go First Airlines subsequently filed a plea in a federal court in Delaware, United States, seeking enforcement of the arbitral award.
The award in favor of Go First Airlines, issued on March 30, directed P&W to provide the airline with engines, warning of the risk of the airline shutting down if the engines were not supplied.
In the meantime, Go First Airlines voluntarily initiated insolvency proceedings due to losses incurred as a result of alleged faulty engines supplied by P&W. The grounding of its aircraft increased from 31% in 2020 to over 50% in April 2023, resulting in a loss of over ₹10,800 crore for the company.
On May 10, the NCLT in Delhi admitted the insolvency plea and declared a full moratorium for the company.
On July 5, the Delhi High Court allowed aircraft lessors access to the planes leased to Go First Airlines to carry out maintenance work on them.
