Lessors may deregister aircraft of Go First due to non-paid rentals

Revanth Gattupalli

01 Apr 2023

Go First may be staring at the deregistration of at least six aircraft owned by BOC Aviation and Celestial Aviation over unpaid dues. If the aircraft are deregistered, it will be left with only 30 aircraft in operation ahead of the peak summer season, according to a report by Hindu BusinessLine.

Six aircraft with the registration numbers VT-WJO, VT-WJN, VT-WJW, VT-WJX, VT-WJY, and VT-WJZ are among those that are likely to be deregistered, according to the sources.

"It appears that the discussions with the lessors are not progressing as expected. The airline has been unable to repay the debts despite numerous extensions. Go First requested an additional delay, but the lessors are not likely to change their minds."

Another report by MoneyControl said that Go First has not paid lease rentals for 10 planes for the past two months, forcing its lessors to write to the Directorate General of Civil Aviation on the matter.

Lessors may deregister aircraft of Go First due to non-paid rentals

“Go First has not paid lease rentals for the past two months and despite multiple extensions, there are no signs that the airline will be paying,” said an official aware of the talks between the airline and its lessors.

AerCap Holdings, Celestial Aviation, and BOC Aviation have written to the DGCA over the lease rental dues from Go First for 10 Airbus A320 neo aircraft.

While the lessors have not asked the DGCA to deregister the aircraft, that is likely to be the next step. The lessors will file for deregistration in a month if payment of Rs 700 crore is not made by the airline, the person said.

A deregistration request is usually filed if a lessor and airline fail to reach a payment agreement. It would result in removal from the country’s official register of aircraft and means it cannot be used for flight operations.

This comes amid GoFirst's scuffle with Pratt and Whitney, and a potential lawsuit at least three lessors have asked the airline to remit the lease rentals that have been deferred due to the Covid-19 pandemic. Industry experts believe that this could be a huge hit for the airline ahead of the peak season.

A source said that it owes close to $60-70 million towards one of the lessors whereas it owes another $20-30 million cumulatively towards other lessors. 

According to the airline, it has 61 aircraft in its fleet. Data on planespotter.net showed that almost 50% of its fleet of 29 aircraft is grounded. Most of these aircraft are grounded due to alleged delays in engine deliveries from Pratt and Whitney.

The delayed lease rental payments have added to Go First’s woes as it seeks compensation from Pratt & Whitney for faulty engines, which have grounded half of its fleet. With fewer operating aircraft, the airline’s market share has shrunk, leading to loss of revenue and delayed payments to vendors.

Go First had 30 aircraft grounded as of March 31, including nine on which the lease payments are due, industry officials said. Go First has a total of 61 aircraft in its fleet – 56 A320neos and five A320ceos, according to the airline’s website.

The loss of passenger revenue comes when airfares are high and traffic is soaring after the pandemic. The airline plans to operate 1,538 flights a week in the ongoing summer schedule, 40 lower than last year. The season started on March 26 and goes on till October 28.

Since July 2022, when it first had to ground its aircraft, Go First's market share has shrunk. Market share narrowed to 8 percent carrying 963,000 passengers in February from a peak of 11.1 percent when it carried 1.27 million passengers in May 2022.

The fall in passengers carried has impacted Go First's financials. The airline reported a net loss of $218 million in FY22, according to regulatory filings. This was twice as much as the previous year’s loss of $105 million.

The carrier withheld payments of Rs 5 crore in February to employees, hotel vendors, and transport vendors.

“The airline regularly pays its fuel vendor, but all the rest are paid intermittently and this month at least, hotels and transport vendors have not been paid," an official working with Go First said.

Go First received Rs 210 crore under the government’s Emergency Credit Line Guarantee Scheme (ECLGS) in February, while its promoters put in Rs 210 crore of funding. The airline has already availed of Rs 600 crore under ECLGS.

The Wadia group-backed airline said in March it may be forced to ground 8-12 more aircraft in the next six to 12 months if Pratt & Whitney does not fulfil its contractual obligations and provide the airline with spare engines.

Another official said Go First does not have money to pay its lessors and it has not received compensation from Pratt & Whitney for faulty engines.

“Go First has no choice but to take Pratt & Whitney to court and win the case if they plan to continue operations,” the official said. He added that the airline’s payments to lessors and vendors far exceed the revenue generated by operating its limited fleet.

(With Inputs from MoneyControl and Hindu BusinessLine)

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Haryana Deputy Chief Minister Dushyant Chautala on Thursday, March 30 said the Maharaja Agrasen Hisar Airport will be made operational by November 1. Under the regional connectivity scheme, air service will be started from Hisar on nine routes to different states.

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Hisar Airport is set to be functional by November 1

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