New Delhi, May 6 (IANS): "If the airline has filed a voluntary insolvency petition to get loan write-offs, then it is unethical and immoral. The AIBEA will oppose the move," C.H. Venkatachalam, General Secretary, told IANS.

"Other companies will also go for voluntary insolvency petition for loan write offs. The Reserve Bank of India (RBI) and the Indian government should not allow this," Venkatachalam added.

He said the Go Airlines loan account is not a non-performing asset (NPA) for the banks as on 30.4.2023.

"With the company filing an insolvency petition, the banks will be forced to declare the account as NPA and provide for the same in their books of accounts. This will be reflected in the first quarter results," Venkatachalam said.

On May 2, Go Air, while voluntarily landing in the National Company Law Tribunal (NCLT) with an insolvency petition blaming the engine supplier Pratt & Whitney for its woes. The question that immediately popped up was, whether it is a strategy to get loan write-offs.

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.

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.

Be that as it may, according to a report in a leading financial daily, the Go Airlines' promoters may withdraw their insolvency petition if the lenders accept a cut in their loans.

However, bankers seem to be willing to lend more and extend the repayment duration instead of taking a cut in their receivables.

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.

According to reports, the airline has a total liability -- dues to banks, other creditors, vendors etc. -- of about Rs 11,463 crore.

The Indian government-owned Central Bank of India said its outstanding exposure to Go Air 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.