Trouble deepens for Go First as international aviation body issues ‘watchlist notice’ to IRP

On May 2, Go First filed for voluntary insolvency resolution proceedings and sought an interim moratorium on financial obligations.

The Go First crisis is hitting home harder as the Aviation Working Group (AWG), a non-profit entity co-chaired by Airbus and Boeing, issued a “watchlist notice” under the Cape Town Convention (CTC) compliance index. India being the signatory to the convention, the group on Thursday wrote to Go First’s NCLT-appointed interim resolution professional (IRP) Abhilash Lal that non-compliance to CTC-treaty commitments might affect India’s score - positively or negatively, as reported by news daily The Times of India.

The Cape Town Convention (CTC) enables lessors to get their aircraft back from defaulting or defunct airlines.

Also Read | Go First insolvency chronology

On May 2, Go First filed for voluntary insolvency resolution proceedings and sought an interim moratorium on financial obligations. While the Indian aviation watchdog Directorate General of Civil Aviation (DGCA) issued a show cause notice to the airlines on May 4, NCLT admitted Go First's petition for insolvency resolution proceedings and imposes a moratorium on the airline on May 9.

NCLT admitting Go First's plea for voluntary insolvency gives it protection from the airline losing its airport slots and aircraft.

Also Read | Had stopped taking bookings before DGCA notice, will respond in due course: Go First

However, AWG, comprising of the world’s biggest aviation manufacturers, leasing companies, and financial institutions, warned that “Actions in the Go First insolvency proceedings may affect India’s score, positively or negatively on the CTC compliance index, depending on whether such actions are compliant with India’s CTC-treaty commitments. (This) would have a direct and material impact on future financings and leases to Indian airlines."

Also Read | India to decide on Go First bankruptcy, lessors seeking planes fear impact

"There is an obligation to preserve aircraft in the airline’s possession and maintain it and its value until the respective creditors and lessors are given an opportunity to take possession. The foregoing is subject to the overarching right of parties to mutually agree otherwise," AWG secretary-general Jeffrey Wool wrote to Lal.

“While (India) remains on the CTC compliance watchlist, its scorecard should be viewed with caution as it does not yet reflect the potential impact of ongoing material development that has resulted in the watchlist placement,” the notice adds.

Meanwhile, the airline is hopeful of returning to Indian skies in the next two weeks, a source aware of the matter told Moneycontrol.

"The expectations are that none of Go First's aircraft will be taken away by lessors which will let the airline return to the skies in around two weeks at the earliest," a source aware of the ongoing discussions said.