Go First Crisis: Airline Locks Horns With Lessors In A Bid To Begin Bankruptcy Hearings

Some lessors opposed Go Air's plea at the first hearing of the NCLT on Thursday, after the airline had blamed "faulty" Pratt & Whitney engines this week for the grounding of about half of its fleet

Go First said engine failures have cost the airline Rs 108 billion ($1.3 billion) in revenue and expenses.

Source : Getty

Go First's effort to start insolvency proceedings has become ensnared in a tussle with aircraft lessors after they asked the DGCA to deregister some of its planes as a step towards taking them back, reported by Reuters.

According to the report by the news agency, some lessors opposed Go Airlines (India) Ltd's plea at the first hearing of the National Company Law Tribunal (NCLT) on Thursday, after the airline had blamed "faulty" Pratt & Whitney engines this week for the grounding of about half of its fleet. The cash-strapped airline wants the tribunal to accept its plea and is seeking an interim moratorium to save its assets, a move the lessors oppose.

GY Aviation Lease, SMBC Aviation Capital, Pembroke Aircraft Leasing and some others have submitted requests to take back at least 20 planes on Thursday, the regulator's website shows. Go First had to ground more than half its 54 Airbus 320 Neos fitted with Raytheon owned P&W engines by April, according to a filing seen by Reuters.

Engine failures have cost the airline Rs 108 billion ($1.3 billion) in revenue and expenses, it said. Amid the dispute between the lessors and the troubled airline, banks with exposure to it are awaiting the tribunal's decision to decide their next course of action, two people involved in the talks told Reuters.

"Since individual bank exposures are not high and some portion of it is guaranteed by the government, banks are preferring to wait it out till the NCLT order is out," said one of the bankers.

Central Bank of India Ltd, Bank of Baroda, IDBI Bank Ltd and Deutsche Bank are among Go First's financial creditors, a court filing shows.

Although the government has not yet nudged the involved banks to take any specific action, one of the sources said the banks were open to the idea of restructuring.

Central Bank of India has said its exposure to the airline, at 0.91 per cent of its total advances, was Rs 13.05 billion by the end of March, with an additional 6.82 billion sanctioned under a government-backed emergency credit guarantee scheme. The company owes financial creditors Rs 65.21 billion ($798 million), its bankruptcy filing showed, and had not defaulted on any of those dues by the end of April.