Go First Faces Legal Woes as Talks with Lessors Unfold
India’s Go First (GOW) is navigating a challenging legal landscape as it engages in discussions with four lessors to retain select aircraft, according to revelations made during a hearing at the Delhi High Court on December 14, 2023. In a complex legal scenario, some lessors are pursuing legal action against the airline’s administrator, Shallendra Ajmera, citing concerns about the maintenance of their stranded assets.
Go First’s legal counsel informed the court that the airline is in talks with four lessors, including SMBC Aviation Capital, to negotiate the retention of specific aircraft. The carrier, which leases its entire 53-strong fleet from 12 different lessors, halted operations in May, attributing its cash flow crisis to persistent issues with Pratt & Whitney-manufactured engines.
Apart from SMBC Aviation Capital, other lessors involved in the negotiations are Aviation Capital Group, BOC Aviation, CCB Financial Leasing, CDB Aviation, DAE Capital, ICBC Financial Leasing, Jackson Square Aviation, Maverick Aviation Partnership, Merx Aviation Finance, Minsheng Financial Leasing, and SKY Leasing. Some lessors are seeking to have Go First declared insolvent in India’s National Company Law Tribunal (NCLT), while disputes between stakeholders are being settled in the Delhi High Court.
During the proceedings, lessors expressed concerns about the airline’s and Ajmera’s ability to adequately maintain their valuable assets. Questions were raised about the airline’s capability to conduct test flights without risking safety, given the prolonged period of non-operation. Some lessors are considering contempt proceedings against Ajmera for allegedly failing to comply with previous court orders related to aircraft maintenance.
Justice Tara Vitasta Ganju acknowledged the maintenance challenges faced by all parties but criticized Ajmera for the disorderly state of record-keeping, describing it as “completely in disarray.” The court adjourned the matter until December 20.
In a separate development, Ajmera informed the court that none of Go First’s 2,278 employees are reporting for work, potentially due to unpaid salaries for the past six months. CEO Kaushik Khona resigned last month, citing a lack of serious bidders to salvage the airline. While potential buyers like SpiceJet, Sharjah’s Sky One, and Africa-focused Safrik Investments have expressed interest, uncertainties persist around the airline’s future. Go First recently canceled all flights through February 4, 2024, further adding to the challenges faced by the beleaguered carrier.