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Ace Aviation, which has been fighting Jet Airways for the acquisition of three Boeing B777 aircraft, on Wednesday said it must acquire them in six months as the deadline for the conversion of these wide-bodied planes to freighter aircraft is fast approaching.
“We would like to close the aircraft deal in the coming six months. We hope it will be even earlier than that. Maybe in three to six months. We will have to reconsider what we will do if we don’t close it (the deal). Closing is one thing. You still have to activate the aircraft and take it out which takes a lot of time because of the aircraft condition,” said Chief Investment Officer of Challenge Group, Michael Koish.
Challenge Group is the parent company of Malta-based Ace Aviation.
Koish said they have conversion slots (time slots given to change plane type) in early 2025 to convert passenger aircraft to freighter aircraft and for that, they need the acquisition of the assets within six months.
“Our first conversion will be in early 2025. We should bring the aircraft to the Maintenance, Repair, and Overhaul (MRO) by the beginning of 2025. But if we see that we cannot close (the sale) we'll buy a different aircraft,” they said.
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MROs are facilities that ensure aircraft are maintained and are in flying condition. The Israel Aerospace Industries will be handling the conversion (changing a wide-bodied plane to a freighter) for Ace Aviation.
“Needless to say if we missed our conversion slots we would have to pay penalties and could potentially lose our slots altogether,” Koish said.
Challenge Group chief executive officer Eshel Heffetz said they have deposited $5.6 million for five aircraft, of which $4.6 million is earmarked for three aircraft in Mumbai, and the token of $1 million is for the other two Boeing B777 aircraft in Delhi (in respect to which a formal bid is yet to be completed).
He said that Ace Aviation last inspected the assets one and a half years ago and is now planning to conduct another inspection.
“The risk is high for the aircraft and the humid environment doesn’t help. The value of assets keeps decreasing,” Heffetz said.
Ace approached the National Company Law Appellate Tribunal (NCLAT) on Wednesday seeking to expedite the sale of three aircraft in Mumbai.
The company won a favourable order from the appellate tribunal in December last year where the court had told the Monitoring Committee of grounded Jet Airways to close the sale of aircraft. The company has not been able to take possession of the assets since 2022.
The finalisation of the sale of the aircraft was put on hold following a deadlock between the lenders and the successful bidder of Jet Airways, the Jalan-Kalrock consortium (JKC).
Koish elaborated that the lessor community is looking at their situation as a sort of ‘test case’ to fine-tune their strategy for Indian airlines.
“We have a small lessor community where we know each other. For many lessors, ours is like a case study for them since the Indian court has ruled in our favour. We believe in the system and will do the needful to ensure we acquire the assets this year. Our case will have wider repercussions for the lessor community in India,” Koish added.
