Go First sets up co with former staff to deal with leasing firms

Targeted by contempt petitions from aircraft lessors on non-disclosure of plane documents, bankrupt airline Go First has floated a company with its former employees to liaise with the leasing companies.

In December, the airline floated SP Mumbai Aviation, led by Sachin Naik, a former employee in the aircraft finance department. In letters to aircraft lessors, which ET has seen, Go First's resolution professional said the company has been formed "by certain Go First" employees for the "collation of aircraft records/documents".

"Go First (through the undersigned) can also assist the lessors to engage MROs (maintenance, repair, overhaul firms) through Naik for carrying out the required maintenance of the aircraft as may have been identified through the records," said the letter.


A lawyer representing one of the lessors, however, said on condition of anonymity, "This is a weird move which has come as a reaction to the contempt petition. It's also because Go First has no manpower to maintain the aircraft."

Most lessors have agreed to this "tripartite arrangement", he said, "because we have to protect our aircraft". "Under IBC (Insolvency and Bankruptcy Code) norms, the resolution professional is responsible for upkeep of the assets, including aircraft. But Go First has no money or people. So the lessors will bear the costs of maintenance. At least then the aircraft will not go to decay," the lawyer said.

ET's queries sent to Naik of SP Mumbai Aviation, spokesperson of Go First's parent Wadia group and the resolution professional, EY's Shailendra Ajmera, did not elicit a response till press time.

Go First is grappling with angry lessors even as it clutches at thinning straws of hope for an investor bid in India's bankruptcy court. It is also fighting a legal battle with engine maker Pratt & Whitney, which it has accused of being the reason for its financial troubles.

Recently, DAE (SY22) 13 Ireland Designated Activity Company, a unit of DAE Capital, recently filed a contempt petition in the Delhi High Court, accusing the resolution professional of wilfully refusing to comply with the court's orders in October. On October 12, the high court had asked the resolution professional to share crucial documents related to the aircraft - records of removals of spares, storage and airworthiness - within a week. DAE and other lessors said they had not got access to any document. Meanwhile, they said their aircraft were in a state of decay, ill-maintained, dirty and uncovered during the rains.

Go First had defaulted on lease payments on these aircraft before it went to bankruptcy. But India's bankruptcy laws protect assets from being deregistered if a company is undergoing insolvency proceedings. The Delhi National Company Law Tribunal (NCLT) had on May 10 last year admitted the airline under the corporate insolvency resolution process.

The airline has defaulted on Rs 3,802 crore to its aircraft lessors and vendors, it said in its insolvency petition with the NCLT.

The airline has attributed its woes to the faulty engines supplied by Pratt & Whitney, claiming this forced it to ground half its fleet. It further said the non-availability and engine failures had forced it to incur a loss of more than ₹10,800 crore. The lessor, in turn, accused it of non-payment of rentals.

Last month, three entities - Sharjah-based aviation company Sky One, Africa-focused Safrik Investments and Go's rival airline SpiceJet - showed interest in acquiring the airline. None of them have submitted a serious bid.