The decision of Go First to file for voluntary insolvency proceedings has turned the spotlight on its lenders who have an exposure of Rs 6,521 crore.

In its insolvency filing with the National Company Law Tribunal, the airline said it has not defaulted on any of its loans till April.

“However, considering the present financial situation of the corporate applicant, defaults to financial creditors would be imminent,’’ the budget carrier said.

The Wadia-owned airline’s financial creditors include Central Bank of India, Bank of Baroda, IDBI Bank and Deutsche Bank.

Axis Bank has denied reports it is a lender. "As on date Axis Bank has nil (fund-based and non-fund based) outstanding from Go Airlines,’’ the bank told the stock exchanges.

While the NCLT filing showed Central Bank of India had an exposure of Rs 1,300 crore, an official from the bank told Reuters that its total exposure is Rs 2,000 crore.

Bank of Baroda has provided around Rs 1,400 crore and IDBI Bank around Rs 50 crore.

Stocks of the lenders came under pressure on Wednesday as investors feared the banks would have to take a haircut.

Analysts said the development could push the Indian aviation sector towards a duopoly led by IndiGo and the Tatas.

A Macquarie report which has an outperform rating on the IndiGo stock with a target price of Rs 2600 said that while the market is moving towards a duopoly structure, high yields will continue which will benefit IndiGo.

Analysts at Credit Suisse said reviving Go First would be difficult, given the experience of Jet Airways and that current players are unlikely to participate in the bankruptcy process.

Meanwhile, NCLT on Thursday will hear Go First’s voluntary insolvency resolution plea.

The petition was mentioned before the Delhi-bench headed by President Justice Ramalingam Sudhakar.

Wadia to stay

The owner of Go First has no plans to exit the budget carrier after engine troubles forced it into bankruptcy, the airline’s CEO told Reuters on Wednesday.

“The Wadia group, in particular Nusli Wadia, has always tried to see that the company and the airline operations go on, on a normal basis, in spite of the fact that we are completely disabled to that extent by Pratt & Whitney,” CEO Kaushik Khona said.

“There is no question of Wadia group having any intention to exit or move out.”

“The Indian government is very keen we should not fail,” Khona said.

P&W assurance

A day after Go First filed for insolvency proceedings and cancelled flights citing non-availability of P&W engines, the US-based engine maker on Wednesday said it is complying with the arbitration order regarding the airline and continues to prioritise delivery schedules for all customers.

Sources close to Pratt & Whitney (P&W) claimed that Go First has a lengthy history of missing its financial obligations to the engine maker.

SpiceJet move

Budget carrier SpiceJet on Wednesday said it is working to revive 25 grounded planes and has so far mobilised Rs 400 crore for revival of these aircraft.

In a statement, SpiceJet said funds for the revival of the 25 aircraft will be drawn from the government’s Emergency Credit Line Guarantee Scheme (ECLGS) and better cash accruals.

Sources said there were supply chain and other issues for the grounding of the aircraft. But, these are getting resolved, so they would be revived in a phased manner. With inputs from Reuters