Aviation leasing watchdog cuts India’s rating amid Go First legal tussle with lessors
- The move by the Aviation Working Group (AWG), a UK-based entity that monitors leasing and financing laws, comes as bankrupt budget carrier Go First is locked in a legal tussle with aircraft lessors
UK-based global aviation watchdog Aviation Working Group (AWG) has downgraded India's compliance rating with international leasing laws amid debt-ridden airline Go First's legal tussle with its lessors. The aviation watchdog has put India on a watchlist with a negative outlook, a Reuters report said on Monday.
Also Read: Go First lessor case: Delhi HC may pronounce final order soon
"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 notice by Aviation Working Group said with a warning of further downgrading of ratings.
Aviation Working Group (AWG) monitors leasing legal and financial laws and operates on a non-profit basis jointly chaired by Airbus and Boeing. India's rating has been lowered from 3.5 out of 5 to 2. The downgrade comes amid a tussle between Go First and its lessors who are seeking repossession of aircraft. The lessors have expressed concerns that essential aircraft components are deteriorating or being unlawfully taken away.
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Go First declared bankruptcy in May and the Indian regulations prevented lessors from claiming 50-plus grounded Airbus planes.
Against international norms
As per the report, AWG said that 130 days have passed since the lessors requested to repossess the aircraft. India is a signatory to the Cape Town convention which lays out a maximum waiting period of 60 days. This international treaty is designed to safeguard the rights of lessors when it comes to reclaiming their assets.
Also Read: Lessors should move division bench of High Court, says Go First RP
AWG members include Aircastle, BOC Aviation, SMBC Aviation Capital, Deutsche Bank, Goldman Sachs, and Morgan Stanley. The Go First situation and the subsequent downgrade might exacerbate the erosion of lessor trust within the world's third-largest aviation market.
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First Published:25 Sep 2023, 11:17 PM IST
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