 "Michael Koish, Chief Investment Officer of Challenge Group")
Ace Aviation, which has been fighting Jet Airways for the acquisition of three Boeing B777 aircraft, on Monday told Business Standard that if the deal does not materialise, they will have to reconsider whether India is the right market for them.
“We believe in the Indian judicial system and need cooperation from the other parties to finalise the deal. However, if the deal does not materialise despite our significant investment of money and effort, we will have to reconsider whether India is the right market for us,” said Chief Investment Officer of Challenge Group Michael Koish.
Challenge Group is the parent company of Malta-based Ace Aviation.
Koish said they have approached other potential sellers for alternative aircraft as the deadline for conversion of these wide-bodied planes to freighter aircraft is approaching in early 2025.
“This delay in procuring B777 aircraft in time for our scheduled Maintenance, Repair and Overhaul (MRO) slots in early 2025 will present a significant challenge for us, as we are committed to utilising these slots for converting passenger aircraft into freighters. If procurement delays extend beyond our anticipated timeframe, we will have to find alternative B777 aircraft swiftly. We have already approached some potential sellers to explore relevant 777-300ERs opportunities in the market,” he said.
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The Israel Aerospace Industries will be handling the conversion (changing a wide-bodied plane to a freighter) for Ace Aviation.
This development comes ahead of the hearing in the National Company Law Tribunal (NCLT), Mumbai, where Ace Aviation had filed a complaint against the monitoring committee of grounded Jet Airways, expressing difficulties in procuring the aircraft despite the Supreme Court ruling in its favour in March this year. The NCLT is expected to hear the matter on June 18 (Tuesday).
Koish said it has been two years since the last inspection of the aircraft and it is difficult to determine whether the aircraft are in flying condition.
“One significant issue is the need for an additional inspection of the aircraft, which has been pending for two years since the initial inspection. This comprehensive inspection is crucial for us to understand the current condition of the aircraft and accurately assess the work needed to reactivate them. Despite our repeated requests to conduct this inspection at our own cost, Jet Airways insists on sticking to the initial plan, which provided for such inspection after the escrow agreement is signed,” Koish said.
He claimed that according to the initial agreement, the escrow account was supposed to be completed two weeks after the Letter of Intent (LOI) was signed, but nearly two years have passed without progress. “On the one hand, they don't allow us to inspect the aircraft before we sign an escrow agreement and on the other, they ignore the Supreme Court decision and don't respond to our request to progress with the escrow agreement. We are ready and willing to proceed, but without their cooperation, we are unable to move forward,” he added.
Challenge Group CEO Eshel Heffetz had earlier told this newspaper that they have deposited $5.6 million for five aircraft. Out of this amount, $4.6 million is for the three in Mumbai and the token of $1 million is for the other two Boeing B777 in Delhi (in respect to which a formal bid is yet to be completed).
Koish said it has been three months since the Supreme Court directed the banks and SRA (Successful Resolution Applicant), that is Jalan Kalrock Consortium (JKC), to cooperate and expedite the sale of aircraft to us, but they have not been cooperative. Such delays underscore their trust in the Indian judiciary and belief in the resilience of the Indian market, he said.
“The ongoing delays in the acquisition and transfer of aircraft through legal processes are closely observed by investors, lessors, airlines, financiers, and the entire global aviation market. The way these challenges are addressed will undoubtedly influence future business decisions and the overall investment climate in India's aviation sector. The response and resolution from the market will impact the confidence of stakeholders in conducting business in India moving forward,” Koish said.
Ace Aviation had won a favourable order from the appellate tribunal in December last year where the court had told the Monitoring Committee of Jet Airways to close the sale of aircraft. The Supreme Court had then on March 7 upheld this order
The finalisation of the sale of the aircraft was put on hold following a deadlock between the lenders and the successful bidder of Jet Airways, and JKC.
