After a Singapore tribunal ordered engine manufacturer Pratt & Whitney (P&W) to supply bankrupt Indian carrier Go First five engines a month until December, the two sides have been in talks for a new lease agreement. Multiple sources aware of the discussions told Moneycontrol that the agreement will involve the supply of up to 30 new GTF (geared turbofan) engines.
“Both parties have been in talks for the last few weeks to reach a new lease agreement under which P&W will supply around 30 new GTF engines to the airline from December,” an executive close to the engine manufacturer told Moneycontrol.
He added that under the terms of the new agreement being discussed, P&W has offered to be in be paid three smaller tranches, instead of a lump sum upfront payment, for its engines and has offered to cover the maintenance and servicing costs of the engines.
Another executive aware of the discussions told Moneycontrol that the earlier engine lease agreement signed between P&W and Go First would be terminated if the new terms are accepted by both parties.
Also Read: Go First cleared to resume operations, set to make history
SIAC Verdict
An executive from Go First who is aware of the discussions told Moneycontrol that the new lease agreement is being discussed as part of Go First’s plans to scale up operations in 2024, once it restarts operations.
“P&W has come to the table with a new offer to continue supplying engines to Go First following the verdict by the SIAC, and both parties are discussing terms to move forward amicably," the official said.
SIAC refers to the Singapore International Arbitration Centre, where the two sides were engaged in arbitration over faulty P&W engines that Go First says led to its fleet being grounded and forced it to file for insolvency.
Also Read: Go First gets claims worth Rs 23,777 cr from creditors: Sources
The development comes after the SIAC directed the US engine maker to deliver five engines a month to Go First from August through December.
Further, the SIAC directed the erstwhile management of Go First, which had initiated the arbitration in Singapore, to get an undertaking from Go First’s Resolution Professional (RP) that any costs incurred by Pratt & Whitney in complying with its order shall be cleared by the airline once it restarts operations.
The order also said that if the airline goes into liquidation all costs incurred by P&W to comply with the SIAC order will be cleared by the airline.
Cleared for take-off again
Cash-strapped Go First, which had been flying for more than 17 years, stopped operations on May 3. It is now in the midst of an insolvency resolution process.
Last week, the Directorate General of Civil Aviation granted the airline permission to resume operations with 15 aircraft, subject to conditions, including scheduled flight operations that will be approved for commencement after the availability of the required interim funding and approval of the airline’s flight schedule by the regulator.
On July 23, Go First announced that due to operational reasons, it had cancelled its flights until July 25th.
Earlier, on July 19, Go First had provided additional information sought by aviation watchdog DGCA following the special audit of its facilities in Delhi and Mumbai.
On July 10, Go First Resolution Professional Shailendra Ajmera invited Expressions of Interest (EoI) from prospective buyers for the airline to expedite the sale process.
The deadline for submitting EoIs is August 9 and the final list of prospective resolution applicants will be declared on August 19, according to a public notice.
Back story
Back in 2016, GoFirst decided to purchase 72 A320neos, which were to be powered by Pratt and Whitney engines. The GTF is a gear in the engine that reduces the rotational speed of the engine and allows for the use of the fan even at a lower speed.
In the last couple of years, apart from supply chain management issues due to Covid and then the Ukraine war, there were other issues with the GTF engines, leading to a number of incidents on flights operated by IndiGo and GoFirst, forcing the DGCA to take action.
In 2019, the DGCA asked IndiGo and Go First to replace around 30 PW engines, which have been used for over 3,000 hours.
The DGCA had also issued a safety advisory in 2019 pertaining to issues with Pratt & Whitney’s geared turbofan engines after several aircraft were grounded by operators IndiGo and GoAir in 2018.
As part of its advisory DGCA had said that aircraft fitted with the engines have run into technical and operational glitches, and DGCA has detected a pattern of an increasing number of incidents involving Airbus 320 Neo planes.
The aviation regulator had found a fault in the low-pressure turbine (LPT) engine of the GTF engines and ordered both IndiGo and Go First to replace their older engines with the new and modified Neo engines, fitted after June, in which the design problems of the gearbox or the LPT have been remedied.
The DGCA had found that aircraft that have flown more than 2,900 hours and didn’t have a new modified engine that were supplied after June 2019 were found to be most prone to developing glitches.
Earlier, P&W was the only manufacturer producing these engines. Now, other manufacturers such as Safran have started making them, and airlines such as Air India and IndiGo have shifted to the new engines.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
