Tuesday, May 16, 2023

Go First crisis could make it harder for airlines to secure loans: Report

Airlines operating in India could find it hard to secure loans from banks and financial institutions in the wake of Go First’s voluntary insolvency plea, which was recently admitted by the National Company Law Tribunal (NCLT).

The initiation of the insolvency proceedings against the cash-strapped airline means that it has secured protection under a moratorium against aircraft lessors and financial creditors.

While banks had already grown cautious about lending to the aviation sector after Jet Airways was grounded in 2019, the fresh Go First episode has led to more panic among lenders.

Lenders are now asking for increased collateral or promoters to pledge more personal holdings to access loans for lending to airlines, reported the Economic Times quoting airline executives.

The sources quoted in the report said the creditworthiness of the sector improved after Tata Group acquired Air India and consistent performance from IndiGo, but the bankruptcy filing by Go First has offset the gains.

16/05/2023 India Today

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