Lessors of crisis-hit carrier Go First have requested to deregister and export nine more A320 aircraft, an official of the Directorate General of Civil Aviation (DGCA) said on May 9.
As per the details shared by the aviation regulator on its website, the lessors who have sought the repossession and export of nine more aircraft are: Jackson Square Aviation and DAE (SY 22) 13 Ireland Designated Activity.
This comes a day after a batch of lessors had called for the deregistration and export of 13 more more A320 aircraft, under the provisions of Irrevocable Deregistration and Export Request Authorization (IDERA). This was preceded by a similar request made for 20 other aircraft on May 5.
In all, the lessors have so far requested to deregister and export 42 A320 aircraft of Go First, which suspended all flights and filed for insolvency on May 2.
Additionally, three lessors of SpiceJet -- Wilmington Trust SP Services (Dublin), Sabarmati Aviation Leasing and Falgu Aviation Leasing have also requested to de-register and export one aircraft each. All the three planes are Boeing 737-8.
"Two of the three planes are grounded for a long period now and the same doesn’t affect our operations. We hold a very good relationship with the lessor and are in discussion to resolve the matter. We have been working to bring back our grounded fleet basis the loan sanctioned under the ECLGS scheme," a SpiceJet spokesperson said.
Also Read | Go First seeks urgent order from NCLT as lessors move to repossess aircraft
Go First, the second Indian airline since 2019 which has suspended services, owes Rs 6,500 crore to its creditors which includes lenders such as Bank of Baroda, IDBI Bank, Central Bank of India and Deutsche Bank, according to its bankruptcy filing. It had not defaulted on any of these dues as of April end.
The airline's total liabilities to all creditors, including banks, financial institutions, vendors and aircraft lessors stand at Rs 11,463 crore.
Lessors caught off guard
Go First's move to file for bankruptcy took the lessors of its aircraft off guard, and they are now caught between a rock and a hard place. If the NCLT accepts the airlines’ request for a moratorium on its financial obligations, they will not be able to take back their aircraft from the airline even if they don’t get paid.
The Insolvency and Bankruptcy Code (IBC) prohibits the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. This means that if Go First goes into insolvency, lessors of the airline cannot take back the flights.
Since Go First went public with its insolvency plans, these lessors have made a dash to get the aircraft back by applying to the aviation regulator, the DGCA, to deregister some of its planes.
This is a long-drawn process but even if they get access to the planes, the next challenge would be to get these planes to fly. Most of them are grounded because of faulty engines supplied by US-based Pratt & Whitney (P&W); the issue which is at the core of this crisis faced by Go First.
“The lessors would rather get possession of the aircraft and then find a way to fly them than have them lie in some hangar in the possession of the airline. If the moratorium starts, the lessors can’t get the planes back, and breaching the moratorium has criminal penalties,” a lawyer advising one of the stakeholders told Moneycontrol.
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