Go First locks horns with lessors in a bid to begin bankruptcy hearings

Written by Urban Chaturvedi and Sadhi Nayak

NEW DELHI (Reuters) – Indian airline Go First’s efforts to initiate bankruptcy proceedings have become embroiled in conflict with aircraft lessors after they asked the aviation regulator to de-register some of its planes as a step towards returning them.

The first collapse of a major airline in India since 2019 underscores the fierce competition in a sector dominated by IndiGo and the recent merger of Air India and Vistara under the Tata conglomerate.

Some lessors have opposed Go Airlines (India) Ltd’s appeal at the first hearing of the National Corporations Law Tribunal (NCLT) on Thursday, after the airline blamed ‘faulty’ Pratt & Whitney engines this week for grounding about half of its fleet.

The cash-strapped airline wants the court to accept its claim and is seeking a temporary stay to preserve its assets, a move the lessors oppose.

The regulator’s website showed that GY Aviation Lease, SMBC Aviation Capital, Pembroke Aircraft Leasing and some others submitted requests to recover at least 20 aircraft on Thursday.

Go First did not immediately respond to a request for comment on the lessors’ attempt to deregister the aircraft.

According to a filing seen by Reuters, Go First had to ground more than half of its 54 Airbus 320 neos equipped with Raytheon-owned P&W engines by April.

It added that engine failures cost the company 108 billion rupees ($1.3 billion) in lost revenue and expenses.

Amid the row between the lessors and the ailing airline, vulnerable banks are awaiting the court’s decision to decide their next course of action, two people involved in the talks told Reuters.

“Since the individual exposure of the banks is not high and part of it is guaranteed by the government, the banks prefer to wait until the NCLT order is issued,” said one of the bankers.

The bankers sought anonymity because the conversations were private.

The court filing shows that the Central Bank of India, Bank of Baroda, IDBI Bank Ltd and Deutsche Bank are among Go First’s financial creditors.

Although the government has not yet urged the concerned banks to take any specific action, one of the sources said that the banks are open to the idea of ​​restructuring.

India’s central bank said its exposure to the airline, at 0.91% of total advances, was 13.05 billion rupees by the end of March, with an additional 6.82 billion rupees under a government-backed emergency credit guarantee scheme.

The bankruptcy filing showed that the company owed financial creditors 65.21 billion rupees ($798 million), and had not defaulted on any of those dues by the end of April.

($1 = 81.6900 Indian Rupees)

(Reporting by Siddhi Nayak in Mumbai, Urban Chaturvedi and Tanvi Mehta in New Delhi; Additional reporting by Varun Vyas in Bengaluru; Editing by Clarence Fernandez)