Axis Bank informs it has Nil outstanding from Go Airlines

In development to the Go First crisis, private sector lender Axis Bank through a filing has informed that the bank has Nil outstanding from Go Airlines.

"In this regard, we would like to inform you that as on date Axis Bank has Nil (fund based and non-fund based) outstanding from Go Airlines," Axis Bank said in a regulatory filing. 

In the morning deals, public sector banks such as Bank of Baroda, and Central Bank of India traded in the red on May 3 after domestic airline, Go First, which owes Rs 652.1 crore to these banks, filed for bankruptcy on Wednesday.

According to a Reuters report, Go First owes Rs 652.1 crore ($798 million) to Central Bank of India (CBI.NS), Bank of Baroda, IDBI Bank, and Deutsche Bank are among Go First's financial creditors.

Individually on BSE, shares of Axis Bank were down by 0.77 per cent to Rs 863.85 apiece, followed by IDBI Bank which declined nearly 1 per cent and quoted Rs 54.19 apiece, Bank of Baroda dipped over 2 per cent at Rs 183.55 apiece and Central Bank of India stock fell over 3 per cent and traded at Rs 29 per share.

The report further stated that as of April 30, Go First Air had not defaulted on any of the dues.

"However, considering the present financial situation of the corporate applicant defaults to financial creditors would be imminent," the report said.

According to Reuters, the airline's total liabilities to all creditors is Rs 11,463 crore including dues to banks, financial institutions, vendors, and aircraft lessors.

Go First has also defaulted on payments to operational creditors, including Rs 1,202 crore to suppliers and Rs 2,660 crore to aircraft lessors.

Analysts' view on Go First

As per the filings for April 21 and September 21, the brokerage understands that loans from banks were of Rs 2000 crore to Rs 2500 crore, in which Central Bank may have lent Rs 700 crore and ICICI Bank Rs 350 crore to Rs 400 crore.

"The airline's financial difficulties may impact the lenders to Go First include- Central Bank of India (Rs. 1,560 crore), Bank of Baroda (Rs. 1,430 crore), Deutsche Bank (Rs. 1,320 crore), IDBI Bank (Rs. 59 crore) and Axis Bank (Rs. 30 crore) ability to recover their loans," said Rahul Malani, Banking and NBFC Analyst, Sharekhan by BNP Paribas.

He added however, exposure of Go First is minimal as a percentage of overall system loans as well as to the individual loan book of the banks involved, so there would not be a major impact.  Although there is a sentimentally negative read-through for Central Bank of India and Bank of Baroda as they have relatively higher exposure, and as Axis Bank and IDBI Bank have very minimal exposure there is a neutral read-through for it. 

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