Go Airlines CEO, Kaushik Khona, states that Go First has “a huge potential to revive and operate again very soon” and would do so if Pratt & Whitney honours their contract. The airline has lost almost $1 billion since June 2020 due to the aircrafts on the ground compensation caused by the absence of engines from the provider. Go First is not alone as every Indian airline has been suffering because of Pratt & Whitney’s performance.
Kaushik Khona, CEO, Go Airlines, says the losses are tremendous and it is only because of Pratt & Whitney. “A very well known firm has evaluated the loss which we have suffered till date starting from June 2020. April-May 2020 was anyways non operational period. Even if we calculate from June 2020 till date, we have lost almost $1 billion because of the aircraft on ground compensation, which we should be getting. I do not think there is any different reason for losses, and if at all, we had these engines available, we would have been far more profitable. The claim of compensation alone is around Rs 8,000 crore. It is a huge dent on Indian aviation caused by Pratt & Whitney. Based on Pratt & Whitney’s performance, I think every airline in India has been suffering. ”
Well, we were reading a lot of brokerage notes this morning and the biggest question they were asking is will Go First fly again? What is your take on that? Also the Street was a bit surprised given the fact fund infusion was made by promoters 10-15 days ago. What changed materially in the last 15 days?
Thanks for the opportunity to explain what happened. Well, I believe – and that is the reason why we have filed an application under Section 10 – that Go First has a huge potential to revive and operate again very soon. We are confident because a) we have been working with the best operating parameters comparable to the industry and we were only affected by the non-availability of engines by Pratt & Whitney. Had Pratt & Whitney complied with their obligations under the contract, we would not have faced this problem for the last three years. Had Pratt & Whitney, even after not complying with the obligation under the contract, had complied with the arbitration award, which we were forced to go into and which was rendered on March 30, we would have been home and growing our operating fleet.
I hope you are aware but I would just like to give you some short summary of what happened. In March, we applied for emergency arbitration because Pratt & Whitney was not complying with any of the contractual obligations. Finally, we got an award which was very favourable and it also was very clear and unambiguously asked Pratt & Whitney to provide 10 serviceable leased engines per month starting from April 20.
Just to give you a context, immediately after that, Pratt & Whitney wrote to the arbitrator that they will comply with the order in full. That gave us a lot of confidence that finally Pratt & Whitney, which is a part of the $150-billion Raytheon group, and which has exposure in defence and aerospace, would now comply with the award. That is why the promoters committed further funds apart from what they had committed earlier. They gave another Rs 290 crore in the last 10 days of April.
Finally, in spite of what Pratt & Whitney said, when we found that it was trying to find loopholes, again we went to the arbitrator who gave a confirmation that Pratt & Whitney should not only give 10 engines as per the past order for every month, but also induct the 20 engines which are lying with them in their MRO for last more than eight to nine months. Further, they should pick up the 44 failed engines which are lying with us in India and that also should be inducted soon.
Having got this award and that too with a clear finding that no security was required from Go First, Pratt & Whitney was obliged to follow that order. When we found that it was trying to deny to abide by that, we went again and got a fresh order and that also was favourable. So we thought that by April 20, they will provide the 10 engines and that is the reason why promoters were committed – and they still are committed – and provided Rs 290 crore in the last 10 days. After having seen that Pratt & Whitney is trying to again defy, we had to go for the process of what we already filed and simultaneously we also filed for the execution of the award and the US Delaware court has admitted and issued a notice to Pratt & Whitney to comply within three days by Friday or reply.
