The fate of airliner Go First is all set to be decided on Wednesday in a bankruptcy plea ruling, NDTV report said.
It said the fate of the country's fourth-largest carrier Go Airlines and its 7,000 employees will be decided in a bankruptcy plea ruling that will also have major implications for foreign lessors trying to repossess planes.
“The low-cost carrier, recently rebranded as Go First, has said its financial crisis was sparked by ‘faulty’ Pratt & Whitney engines that grounded about half its 54 Airbus A320neos. The US engine maker, part of Raytheon Technologies, has called the claims without evidence,” it said.
The report states if the tribunal admits Go First's plea, it will lead to appointment of a new resolution professional who will take over management to revive the airline run by Wadia Group.
“This is the first time an Indian airline has voluntarily sought bankruptcy protection to renegotiate its contracts and debts,” it added.
It said the unprecedented move could complicate repossession efforts by lessors, which have in recent days filed requests with the aviation regulator for the return of about 40 Go First planes over missed rental payments.
“They now face a major roadblock, as the law prohibits any such recoveries once bankruptcy proceedings are initiated for a company,” it mentioned.
Centre has made it easier for lessors to take back planes if airlines default on payments after joining an international treaty known as the Cape Town Convention, it added.
"Lessors must be very, very concerned right now. The repossession requests will be of no consequence if the insolvency and bankruptcy process kicks in," the report a lawyer as having said.
It said the grounding of Go First, which had a near 8% market share in the world's third-largest aviation market, comes as Prime Minister Narendra Modi has been touting the country's emergence as an aviation powerhouse.
Bigger rivals IndiGo and Tata Group's Air India are charting major expansion plans with hundreds of new planes on order as domestic air travel surpasses pre-pandemic levels, it said.
It added some of the lessors have initiated talks with IndiGo and Air India to take over Go First's planes, the two industry sources said, even though it is unclear how the tribunal's decision on Wednesday could impact such negotiations.
If Go First collapses, it would follow other carriers Jet Airways, which went under in 2019 and Kingfisher, which failed in 2012, it added.
