P&W says pursuing its own legal recourse against Go First's claims

GoFirst is seeking $ 1.1 billion in damages from the engine maker, whom it blames for the airline’s collapse.

US-based aircraft engine manufacturer Pratt & Whitney on May 10 said the allegations made by Indian bankrupt airline Go First holding the company responsible for its financial condition were without merit.

"Go First’s allegations that Pratt & Whitney is responsible for its financial condition are without merit," a spokesperson of P&W told Moneycontrol.

The aerospace major said it would vigorously defend itself against Go First’s claims, and is pursuing its own legal recourse.

Earlier, on April 28, Go First moved an emergency petition before the Delaware Federal Court on April 28, calling for a legal order to force P&W to comply with two arbitral awards issued by the Singapore International Arbitration Centre (SIAC).

"We look forward to responding in the court of law on any actions Go First takes. P&W is complying with the arbitration order which asks PW to take all reasonable steps to dispatch engines to Go First. We are invested in ALL our customers’ success,"  the P&W spokesperson said.

The SIAC ordered P&W on March 30 to provide Go First with at least 10 serviceable engines by April 27 and the remainder by the year-end. After P&W refused to comply, the SIAC issued a second arbitral award on April 15, asking the US company to fulfil its order.

Counter claim

While P&W did not provide any specifics on the "business dispute" between Go First and the company, the engine manufacturer said its current supply chain issues, durability enhancements, and the earlier upgrades made to its GTF engines were separate issues.

P&W had earlier said that Go First had a history of not meeting financial obligations.

Sources close to P&W also said that Go First was in violation of contractual obligations it signed which prompted the engine maker to act "well within its rights".

"P&W continued to support GoFirst in good faith (including financial support) despite contractual violations," a source close to the company said, adding that P&W could not keep supporting Go First at the expense of violating contracts with other customers.

Another official aware of the developments said that all the antics by Go First were to expedite deliveries of engines to itself after financial mismanagement by the airline.

"Airline customers, who have been in good financial standing and compliant with contracts, should not be made to suffer due to the financial mismanagement and contractual violations of one particular airline," the official said.

Similarly, sources also said that Go First was looking to obtain financial relief without the trouble of having to go through a merits arbitration that is likely to find it liable to Pratt & Whitney for a significant sum.

Comments by P&W come just hours after the National Company Law Tribunal (NCLT) admitted Go First's plea for voluntary insolvency resolution proceedings.

Over 50 A320neos of IndiGo and Go First have been grounded for months as PW has been unable to supply replacement engines and spares.

P&W said that it expects industry-wide supply chain pressures to ease later this year, which will support increased output of new and overhauled engines.

The engine maker added that in the interim, it is providing direct logistical support to its suppliers.

"We are expanding our MRO capacity and working to reduce shop visit turnaround times to improve service availability," the P&W spokesperson said.

While the engine maker did not say that allegations made by Go First over the lifespan of its PW-1100G GTF engines were true, P&W did admit that its "on-wing" time was not at the level it expected till now

"We have improved time on wing since program inception, but we are not yet at the level we expected to achieve," the P&W spokesperson said, adding that the company's engine development programme continues to develop solutions to improve engine durability.

Go First has alleged that PW's 1100G GTF engines have had an average lifespan of 6,000 hours which is lower than the expected lifespan of 15,000 hours from the engines.

Airlines including Lufthansa AG, IndiGo, Spirit Airlines and Go First have all been hit by engine issues due to faulty engines of Pratt & Whitney.

P&W also refused to answer questions surrounding the compensation it had paid for grounded planes to Indian airlines in the last two years.

IndiGo had around 35 grounded aircraft till March due to P&W engine.

“We are working with engine makers to get some relief. Some of the compensation has already come in this quarter. We continue to keep working with them to get adequately compensated,”IndiGo CFO Gaurav Negi had said in an analysts call.

IndiGo has now moved away from P&W engines opting for rival CFM International’s engines for its subsequent aircraft.

On May 2, the cash strapped Wadia Group-owned airline announced it had filed an application for voluntary insolvency resolution proceedings before the NCLT, Delhi due to a "severe fund crunch".

The loss-making budget carrier was burning around Rs 200 crore of cash every month since November. No longer able to afford it, it had to resort to filing for insolvency before the NCLT, Kaushik Khona the airline's Chief Executive Officer had said last week.

Khona said that Go First needs at least 20 aircraft to return to service and break even on daily operations.

The airline is seeking $ 1.1 billion in damages from the engine maker, whom it blames for the airline’s collapse.

“We have already crossed 20,000 aircraft on ground (AOG) days in the last three years, losing almost $55,000 each day. This means that my compensation alone, or my loss, which I can claim from Pratt & Whitney alone, will be around $1.1 billion,” Khona had said.

“To ensure this happens, we will tap into many more jurisdictions across the world, some of which are in the US, one in Germany, one in Japan and maybe one or two more in Europe and Singapore,” he added.