On Wednesday, May 10, bankruptcy protection was granted to Go Airlines (India) Ltd by an Indian tribunal. This move aims to assist the country’s fourth-largest carrier in reviving itself, but it may create challenges for foreign lessors seeking to repossess their planes.
Go Airlines, which was recently renamed Go First, is a low-cost carrier that attributes its financial crisis to “faulty” Pratt & Whitney engines that grounded almost half of its 54 Airbus A320neos. The U.S. engine manufacturer, part of Raytheon Technologies, has denied the allegations, stating that there is no evidence to support them.
The National Company Law Tribunal has ordered an interim resolution professional to take over the airline’s management immediately and imposed a moratorium on Go First’s assets and leases.
This is the first time an Indian airline has voluntarily sought bankruptcy protection to restructure contracts and debt.
However, the lessors’ repossession efforts may be complicated by the move, as they have recently requested that India’s aviation regulator return around 40 Go First planes due to missed rental payments. According to lawyers and industry sources, Indian law prohibits such recoveries once bankruptcy proceedings have been initiated for a company.
