Go First Faces Liquidation as Court Orders Return of 54 Aircraft to Lessors
In a significant development for the aviation industry, the beleaguered Indian low-cost airline Go First is on the brink of collapse following a court decision that mandates the return of 54 Airbus A320 aircraft to their respective lessors. This ruling marks a crucial point for Go First, which has been under bankruptcy protection since May 2023.
The airline, formerly known as GoAir, has been grappling with financial difficulties, leading to stalled operations and broken promises. The decision by the Indian court to return the aircraft was influenced by the need to maintain lessors’ confidence in the Indian aviation market, ensuring that aircraft leasing remains a viable option for airlines on the subcontinent.
A Grim Outlook for Go First
The loss of its entire fleet has left Go First with no tangible assets to offer creditors, who are owed approximately $780 million. This has all but dashed any hopes of a revival for the airline. The Committee of Creditors (CoC) is now considering liquidating the airline, a move that could bring an end to the troubled carrier’s journey.
Two bids to acquire Go First are currently under review—one from a consortium led by SpiceJet managing director Ajay Singh and Busy Bee Airways, and another from Sharjah-based Sky One, which specializes in a variety of aviation services including passenger and cargo charter, maintenance, and consultancy.
Potential Bidders on the Horizon
Despite the dire circumstances, there is a glimmer of hope if the bids to take over Go First are successful. Sky One’s chairman, Jaideep Mirchandani, has expressed readiness to utilize the company’s resources to rehabilitate the airline, even after the deregistration of the leased planes.
The future of Go First now hinges on the decision of the CoC. Should the bids fall through or be retracted in light of the repossession, liquidation seems the likely path forward. This would leave lessors and Pratt & Whitney, the engine manufacturers, to continue seeking compensation over aircraft grounding due to engine durability issues. Go First’s compensation claims against Pratt & Whitney exceed $1 billion.
Repossession and Legal Implications
The Delhi High Court’s recent ruling in favor of the 14 leasing companies, which allows for the repossession of the 54 aircraft, is a significant victory for lessors. This decision ensures the enforcement of the Cape Town Convention’s provisions in India, aligning the country with global standards and enhancing the integrity of aircraft leasing.
As the aircraft await collection by their owners at various airports across India, additional security measures have been requested by ACG Aircraft Leasing to prevent further losses after parts were removed from grounded planes.
This court ruling not only affects Go First but is also pivotal for the broader Indian aviation sector. It reassures lessors and ensures that Indian airlines can continue to access new aircraft at competitive rates, crucial for their expansion and modernization efforts. If such protections were not enforced, aircraft lessors might reconsider their engagement in India, potentially disadvantaging Indian carriers against global competitors.
Sources: AirGuide Business airguide.info, bing.com, simpleflying.com