By Venkatachari Jagannathan
Chennai, May 6 (SocialNews.XYZ) Was the 'May Day' call by the Wadia group's low cost airline on May 2 while voluntarily landing in the National Company Law Tribunal (NCLT) with an insolvency petition blaming the engine supplier Pratt & Whitney for its woes, a strategy to get loan write offs? It is the question that begs an answer.
The airline's decision to apply for insolvency blaming the engine supplier has taken its lenders, creditors, staff, credit rating agency and others entirely by surprise.
At the time of the airline landing at the NCLT, the lending banks have not declared the airline as a non-performing asset (NPA).
Perhaps, Go Airlines is the first airline to blame the engine maker for its financial woes.
Two days later credit rating agency, Brickwork Ratings said it has downgraded the ratings for Go Airlines' bank loan facilities aggregating Rs 2,918.33 crore at 'BWR D' based on best available information, as the issuer did not cooperate.
"As per initial reports, the lenders have opposed any moratorium on the debt repayment obligations," Brickwork Ratings said in its report.
"The company has continued to remain non-cooperative, and the present position of the accounts are not available," the credit rating agency said in its report on May 4.
Be that as it may, according to a report in a leading financial daily, the Go Airlines' promoters may pull out their insolvency petition if the lenders accept a cut in their loans whereas the bankers are willing to lend more and extend the duration.
As per the news report, as Go Airlines' loan account is still a standard account, the promoters can submit a bid for the airline whereas promoters of companies whose loan account is declared as a NPA can't submit a bid and try to retain control.
While the airline had said that its promoters had infused Rs 3,200 crore in the last three years and their total investment in the venture is approximately about Rs 6,500 crore, it is silent on its dues when queried by IANS.
As per reports, the airline has a total liability -- dues to banks, other creditors, vendors etc. -- of about Rs 11,463 crore.
According to the Indian government owned Central Bank of India, its outstanding exposure to Go Airlines as on March 31, 2023 is Rs 1,305 crore and an additional amount of Rs 682 crore sanctioned under the Emergency line of credit guaranteed by the Government of India.
Private lender Axis Bank in a regulatory filing said that it has no funded or non-funded exposure to the financially-troubled Go Airlines.
Meanwhile, reports state two other petitions have been filed with the NCLT -- one by SS Associates Services and the other by a Go Airline pilot -- for their dues.
(Venkatachari Jagannathan can be reached at v.jagannathan@ians.in)
Source: IANS
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