Go First won't move against Delhi High Court order, set for liquidation

Go First filed for bankruptcy in May 2023. Since then, the lessors of these aircraft have been locked in a battle with the former owner of the airline and others to take control of their aircraft

Go First will not challenge the Delhi High Court order that told the Directorate General of Civil Aviation (DGCA) to deregister all its 54 aircraft by Friday (May 3), and is heading towards liquidation, people in the know told Business Standard.

Lenders told the newspaper the only option that remained was liquidation. They said they would lose money when the airline was liquidated since the value of its assets had gone down due to prolonged litigation.

“The resolution plan was submitted to revive the airline. The bids were submitted because they saw it as a going concern. With the aircraft deregistered, we are not sure whether it will remain one. Without the aircraft there are only slots available. There is not much value,” said an official of a bank that has an exposure to Go First.
 

 

The DGCA deregistered all 54 aircraft leased to the now bankrupt airline Go First on Wednesday in the wake of an order issued by the Delhi High Court on April 26. Advocate Diwakar Maheshwari, appearing for the Resolution Professional of the airline, had asked the court to keep the order in abeyance but the court refused to do so.
 

This seems to signal the end of the road for the low-budget carrier, which launched commercial flights in November 2005, a mere 10 months before IndiGo did so. However, IndiGo has emerged as India’s largest airline, commanding approximately a 60 per cent share of the domestic passenger market. With a fleet of around 370 planes, IndiGo is the world’s third-most valuable airline by market capitalisation.

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Go First joins the ranks of major carriers such as Kingfisher Airlines and Jet Airways, which went to the wall in 2012 and 2019, respectively, underscoring the challenges inherent in navigating India’s aviation industry.

A lessor said many repossessed planes had missing engines and they were finding it difficult to get them because there was a shortage of Pratt and Whitney engines.

He also said since the aircraft were in a poor state, it was difficult for them to bring them back to their flying condition.

Earlier lessors had told the court there were “greenish deposits” and “rust” on the grounded planes. The court had said the photos given by the lessors of the planes “spoke for itself”.

Go First had filed for bankruptcy in May last year. Since then, the lessors have been locked in a battle with the former owner of the airline, lenders, and the resolution professional to take control of their aircraft.

The Delhi High Court, on April 26, directed the DGCA to deregister planes leased to Go First within five working days, providing much-needed relief to the lessors. With the civil aviation regulator complying with the court order and deregistering the planes, the lessors have now claimed their aircraft.

At an aviation event in February this year, global aircraft and engine lessors expressed deep frustration, using terms such as “scarred”, “burnt”, “egregious”, and the “yellow light of caution”, over their inability to repossess their planes (and engines) from Go First due to ongoing court cases.

Go First had sought the third extension from the National Company Law Tribunal (NCLT) for completing its insolvency process. For this it was granted 60 days on April 8. The NCLT had on November 23, 2023, extended the insolvency process of the grounded airline by 90 days.

The extension had come as a relief for Go First, which has been embroiled in a legal battle over the control of its aircraft with its lessors since May last year. However, the Ministry of Corporate Affairs issued a notification on October 3 last year, exempting arrangements relating to aircraft, aircraft engines, airframes, and helicopters from the moratorium under Section 14(1) of the Insolvency and Bankruptcy Code (IBC), 2016.

The Director General of Civil Aviation (DGCA) then filed an affidavit at the Delhi High Court, saying that the notification exempting aviation leases from moratorium under the IBC should apply to pending cases as well.

Sharjah-based aviation company Sky One and domestic airline SpiceJet promoter Ajay Singh, along with an entity called Busy Bee Airways, which is owned by Nishant Pitti, owner of online travel portal EaseMyTrip, are the bidders for the airline. Now with all 54 aircraft gone, any chance of revival for the aircraft is over, people in the know said.

Go First ceased flights on May 3 last year, following the submission of an insolvency application to the NCLT. On May 10, 2023, the tribunal imposed a moratorium on the airline’s assets, effectively preventing the lessors from reclaiming their aircraft (and engines on them) from the carrier. This decision had left them profoundly discontented.