Wadia group-owned Go First has decided to cancel all its flights for three days starting from Wednesday, extending the suspension of operations by one more day, according to a communication.
The budget carrier has also filed an application for voluntary insolvency resolution proceedings before the National Company Law Tribunal (NCLT), Delhi.
Speaking to PTI, Khona said the airline has grounded 28 planes, more than half of its fleet, due to non-supply of engines by Pratt & Whitney (P&W). This has resulted in a fund crunch.
"It is an unfortunate decision (filing for voluntary insolvency resolution proceedings) but it had to be done to protect the interests of the company," he said.
The airline has informed the government about the developments and will also be submitting a detailed report to aviation regulator Directorate General of Civil Aviation (DGCA).
Once the NCLT admits the application, then the flights will be restarted, Khona said.
Amid uncertainties over its future course, Go First said it would provide a full refund of tickets.
Go First has more than 5,000 employees.
Go First said it has been forced to seek voluntary insolvency resolution proceedings due to "serial failure" of Pratt & Whitney engines resulting in grounding of 50 per cent of the fleet and is no longer in a position to continue to meet its financial obligations.
The latest move by the Wadia group-owned carrier, which has been flying for more than 17 years, came after arbitration proceedings in Singapore and a suit filed in a US court seeking enforcement of the arbitration award last month.
In a detailed statement shared with PTI, Go First said it has been forced to apply to the National Company Law Tribunal (NCLT) because of the recurring and persistent issues with the GTF (Geared Turbofan) engines supplied by P&W.
Also, Pratt & Whitney has failed to repair those engines and/or provide sufficient spare leased engines as it was required to do pursuant to its obligations under the relevant agreements between them.
Promoters have infused funds worth Rs 3,200 crore into the airline in the last three years and out of the total amount, Rs 2,400 crore was injected in the last 24 months. An amount of Rs 290 crore was pumped in April this year.
"This brings the total investment in the airline since its inception to approximately Rs 6,500 crore," the statement said.
Further, Go First said it has received significant support from the government's Emergency Credit Line Guarantee Scheme (ECLGS).
"Even this collective and significant support has not been adequate to prevent the enormous damage caused by Pratt & Whitney's defective engines.
"The grounding of close to 50 per cent of its fleet due to the serial failure of Pratt & Whitney's engines, while incurring 100% of its operational costs has set Go First back by Rs 10,800 crore in lost revenues and additional expenses," it said.
According to the airline, it is no longer in a position to continue to meet its financial obligations and has taken the step to approach the NCLT "to protect the interests of all stakeholders".
Go Airlines (India) Ltd, which operates under brand Go First, has applied to the NCLT for resolution and protection under Section 10 of the Insolvency and Bankruptcy Code "due to the ever-increasing failure of the Pratt & Whitney engines that power its fleet", the statement said.
The airline, which has been grappling with engine issues since January 2020, said it has been forced to move the NCLT as P&W refused to comply with an order issued by the Singapore International Arbitration Centre (SIAC), an emergency arbitrator.
The arbitrator had ordered P&W to take all reasonable steps to release and dispatch without delay to the airline at least 10 serviceable spare leased engines by April 27 and another 10 spare leased engines per month until December 2023, as per the statement.
"If Pratt & Whitney had followed the directions laid down in the award, Go First would have been able to return to full operations by August/September 2023 leading to Go First's financial rehabilitation and survival.
"Pratt & Whitney has failed to provide any further serviceable spare leased engines at all at the date of this press release and has stated that there are no further spare leased engines available," the statement said.
The airline also said that it regrets the disruption and inconvenience that the latest move will cause to its customers, travel partners, creditors, and suppliers and, in particular, to its own employees.
Meanwhile, aviation regulator DGCA on Tuesday issued a show cause notice to Go First after the airline decided to cancel flights for two days amid a severe financial crunch.
The crisis-hit airline has cancelled all their scheduled flights for May 3 and 4 "without any prior intimation", the Directorate General of Civil Aviation said in a statement.
"Since Go First has failed to adhere to the approved schedule leading to passenger inconvenience, this is non-compliance with the condition for approval of the schedule.
"The airline has been called upon to show cause as to why suitable action should not be initiated against the airline for the aforesaid violation," it said.
Go First has been asked to submit its response to the DGCA within 24 hours.
Further, the watchdog has directed the carrier to submit the details of the steps taken to mitigate the inconvenience caused to the passengers booked on flights for May 3 and 4.
The airline also has to submit its plan of action to operate flights as per the approved schedule from May 5.
Go First has filed an application for voluntary insolvency resolution proceedings before the National Company Law Tribunal (NCLT).