GoFirst is under pressure to remit rentals for a large part of its fleet or face the prospect of grounding, just as the peak season for flying approaches.
According to sources, GoFirst owes close to $100 million in lease rentals to lessors. Amid its scuffle with Pratt and Whitney and potential lawsuit, at least three lessors have asked the airline to remit 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.
“The lessors had given enough moratorium to the airline, however, it failed to make regular payments. Its potential lawsuit against Pratt and Whitney has spooked the lessors further. At least three lessors have asked the airline to either remit rentals or brace for grounding,” said a source requesting anonymity.
The source said it owes close to $60-70 million to one of the lessors, and $20-30 million cumulatively to other lessors.
Responding to queries, an airline spokesperson said it would not be able to share commercial information which was private to the Wadia Group-owned airline. Albeit, GoFirst is in discussion with every lessor.
“It may not be out of place to mention that the promoters have infused almost ₹3,000 crore by way of equity/ funds/ non-fund-based limits in the last 18 months, to tide over the challenges of Covid, war and other challenges. GoFirst has paid lease rent to lessors in the past months, including for non-revenue earning grounded aircraft.”
According to the company, it has 61 aircraft in its fleet. Data on planespotter.net showed that almost 50 per cent of its fleet, or 29 aircraft are grounded. Most of these aircraft are grounded due to alleged delays in engine deliveries from Pratt and Whitney.
Sources, however, said this is a Catch 22 situation for the airline. “On the one hand, half of its fleet is grounded. Within the next few weeks, the industry will be entering the peak season. Inability to fly half of its fleet will impact its cash flow. Once the first quarter of the fiscal ends, the industry typically enters a lean period, making it all the more difficult for the airline.”
With other airlines including IndiGo, Air India and Akasa increasing capacity, lessors would find it more lucrative to redeploy aircraft with other airlines.
Lessors aren’t the only one the airline has deferred payments to. businessline recently reported that it had delayed salaries to its pilots and cabin crew, too. If this was not enough, its IPO plans have also been put on hold, according to sources.