Returning to lessors will render Go First dead: IRP to Delhi HC
The Interim Resolution Professional (IRP) appointed by National Company Law Tribunal (NCLT) to manage the crisis-hit Go First airlines told the Delhi high court on Tuesday that returning aircraft to lessors would render the airline “dead”.
The IRP, Abhilash Lal , represented by senior advocate Harish Salve, was responding to pleas by several aircraft lessors seeking deregistration of their planes by aviation regulator Directorate General of Civil Aviation (DGCA) so they could take them back from Go First.
“This (returning aircraft) will scuttle the entire process. Look at the consequences…. If the aircraft are returned, that’s the end of this airline, it’s dead. Thousands of people who are employed, right from the person who cleans and scrubs the floor of the office spaces, pilots, large people who work at check-in counters…. Airline is a very employment intensive industry,” Salve told justice Tara Vitasta Ganju.
Saying that Go First has over 7,000 employees, the senior counsel added: “My client has to take charge of all this, they will have priority. Ultimately it’s a question of money. These are all leased aircraft. Those issues have to be worked out.”
Hit by the faulty operations of its Pratt & Whitney engines in its flights, Go First Airlines filed a petition for voluntary insolvency resolution proceedings on May 2. The airline cited the non-delivery of Pratt & Whitney engines, which affected the company’s flight operations to a huge extent. The company stopped its flight operation on May 3. The insolvency plea of the airline was admitted by the National Company Law Tribunal on May 10.
In its petition filed at the NCLT, the airline company has said that it has initiated emergency arbitration proceedings against P&W which is pending, from April 2020 upto till date, adding that the company has paid ₹19,980 crore to its creditors out of which ₹5,400 crore was paid to the lessors in the last two years towards lease rent and maintenance reserve despite 40% to 50% of the fleet being unable to fly, it has now exhausted all financial resources (including full utilization).
It was pointed out that as on April 28, 2023, the company had defaulted on payment of ₹1,202 crore to its creditors and ₹2,660 crore to the airport lessors.
The high court on Tuesday said it will hear arguments on behalf of DGCA May 31. Earlier, the lessors had told the high court that denial of deregistration by DGCA was “illegitimate”.
On May 10, NCLT admitted the airline’s voluntary insolvency resolution petition and appointed Lal as the IRP to manage the carrier.
With a moratorium in force on financial obligations and transfer of assets of Go First in the wake of insolvency resolution proceedings, the lessors are unable to deregister and take back the aircraft leased to the carrier. The lawyers for the lessors said that they approached the civil aviation regulator for deregistration of their aircraft but it rejected their pleas, according to the status of their applications posted on the regulator’s website.