Go Air lessors dealt blow as court bars seizure of Airbus jets

Aircraft lessors seeking to repossess their planes from bankrupt Indian carrier Go Airlines Ltd. suffered a setback after an appeals court upheld a court order that allows the beleaguered carrier to hang onto its fleet of Airbus SE jets as part of an insolvency process. 

The National Company Law Appellate Tribunal on Monday agreed with a lower court order that kicked off Go Air’s insolvency process to rescue the airline. Lessors, such as ACG Aircraft Leasing Ireland Ltd. and SMBC Aviation Capital Ltd., can approach the insolvency court and seek to take back planes for which the leases had been terminated prior to the airline’s admission into insolvency. They also have the option to appeal against the decision before the country’s top court.

The verdict boosts prospects for Go Air’s revival. The airline sought insolvency protection earlier this month and blamed Pratt & Whitney’s engines that failed prematurely and left half its A320neo fleet grounded. The airline said it is not able to meet financial obligations after suffering a loss of 108 billion rupees ($1.3 billion) due to its idled planes. 

Go Air is awaiting a decision by India’s aviation regulator on whether it can continue to operate on its license. It was asked to stop ticket sales for canceling flights abruptly.

The Aviation Working Group, a industry body that represents aircraft financiers and lessors, on May 11 put India on its watch-list. It said the aviation regulator didn’t de-register Go Air’s aircraft as required within 5 days after the lessors terminated the leases and before insolvency proceedings began.

Engine shortages have left a dent across the industry from Deutsche Lufthansa AG and Turkish Airlines to India’s top airline IndiGo, which has sought compensation from engine makers for more than 30 aircraft on the ground.