India was initially put on the watchlist in May and assigned a negative outlook for the failure of the lessors to repossess their planes before the freeze on Go First’s assets.
UK-based global aviation leasing watchdog, Aviation Working Group (AWG), has cut India’s compliance rating with international leasing laws for the second time. India has also been put on the watchlist with a negative outlook. This comes amid the ongoing dispute between Go First and its aircraft lessors.
AWG that monitors leasing and financing laws said that 130 days had passed since the lessors requested to repossess their aircraft. According to a report in Reuters, the lessors have now complained that critical plane parts are corroding or getting “robbed”. The 130 days AWG cited is double the maximum waiting period of 60 days, as per India’s obligations under the Cape Town Convention.
"The prolonged failure to make remedies, including repossession and deregistration, available to creditors ... and provide for asset maintenance and value preservation ... negatively impact scoring," the AWG's notice said, warning of further rating downgrades.
India’s score has been reduced to 2 from 3.5 out of 5.
AWG’s negative outlook for India is under the compliance index that addresses whether requirements under Cape Town Convention are met in practice.
India was initially put on the watchlist in May and assigned a negative outlook for the failure of the lessors to repossess their planes before the freeze on Go First’s assets.
This rating could impact lessor confidence. World's second-largest aircraft lessor SMBC had warned in May that India’s decision to block leasing firms from reclaiming their planes could hurt lessors’ confidence.
Meanwhile, Go First told a court that its revival could be derailed if it agrees to demands of aircraft lessors who are seeking certain records after jet parts went missing or faced deterioration. Dubai Aerospace Enterprise (DAE) Capital and ACG Aircraft Leasing recently sought a Delhi court's intervention alleging the robbery or corroding of certain jet parts.
In response, Go First said that it could be a time-consuming process that could impact its revival. Such requests "have far reaching implications on the day-to-day affairs of Go Air and will have a direct bearing on the going concern status of Go Air," said bankruptcy officer Shailendra Ajmera in court filings. He said that such “time-consuming exercises” would divert the resources of Go First.
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