You see, the airline business is actually dependent on multiple external parties. If you want to set up an airline, you won’t build out your own fleet. You’ll buy or lease the aircraft from two entities — Airbus or Boeing. And then you need to get engines from other suppliers like Rolls Royce and Pratt & Whitney (P&W). You put these two ‘outsourced’ bits together and you’re ready. What you’re in charge of is simply running the show. Make sure you’re flying profitable routes, check costs, and get great pilots and staff who show up every day. (View Highlight)
Unfortunately for Go First, their P&W engines began to fail. And Go First had to stop flying those aircraft fitted with these problematic engines. In December 2018, around 10% of Go First’s fleet had to be grounded. This rose to 30% by December 2021. And at last count, 50% of its 54 aircraft were unflyable. (View Highlight)
Well, look at its rival IndiGo which suffered from the P&W engine failures too. It had to ground its fleet in 2016. But IndiGo didn’t sit idle. When it realized the scale of the problem, it quickly switched its engine supplier. And in 2019, it signed a $20 billion deal with CFM International for the engines in IndiGo’s new aircraft. It didn’t want to take a chance. (View Highlight)
Oh, and IndiGo also managed to get P&W to pony up. It wrangled compensation for all the losses it had suffered due to P&W’s faulty engines. (View Highlight)
Now we don’t know what was in their respective contracts. But all we know is that Go First had to fight. It had to fight for compensation. It had to drag P&W to an emergency court. Just to try and get some spare engines as a replacement. And even though P&W was ordered to provide 10 such engines by April 2023, it apparently never came through. (View Highlight)
See, during the pandemic, the government introduced a scheme called the Emergency Credit Line Guarantee Scheme. The purpose was to get banks to lend money to companies without fear. And if the company in question defaulted on the loan, the government would take the hit. Not the bank. And apparently, Go First borrowed ₹1,300 crores under this scheme as well. (View Highlight)
