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Post Kingfisher Airlines fiasco, Indian banks are playing safe by asking airline companies to put more tangible collateral on the table. The Wadia group has offered a Rs 913 crore land in Thane, owned by a group company - Botanium Ltd, to its bankers to avail loan facilities.
Bank sources said the loss-making airline had offered a corporate guarantee from Botanium Ltd but the banks said more collateral should be offered especially in view of the Rs 7,000 crore loan default by Kingfisher Airlines.
When contacted, GoAir’s CFO Siddhartha Datta said GoAir is adequately funded for its requirements both at the present time and for the future to fuel its growth trajectory.
“GoAir has met all its financial obligations to Banks (interest and principal) and other creditors including payments to fuel companies, lessors, airport authority of India, employees and statutory dues,” he said.
GoAir is owned by the Wadia family and enjoys a total credit facilities of Rs 1,221 crore from the Indian banks including loag term and short term loan facilities. It is seeking to raise Rs 150 crore as short term facility.
Apart from land, the Wadia family has also pledged marketable equity shares of the listed Wadia group of companies. The group has three listed entities: Bombay Dyeing, Bombay Burmah and Britannia Ltd.
Bank sources say they are insisting on increased collateral from airline companies after they realized that the non-tangible assets offered by airlines like brands have no value and no takers if they start defaulting on loans. The collateral by way of land offers more comfort to the banks as they can sell the land in case of any default.
The Vijay Mallya-owned Kingfisher Airline has failed to repay its loans to the government-owned banks as it shut operations last year. With the suspension of services by the airline, the banks are staring a huge hole in their balance sheet.
As per public records, GoAir’s fleet consists of 11 180-seater Airbus A320 aircraft. It operates across 22 domestic destinations with about 638 flights. GoAir has reported a total operating income of Rs 1,466 crore in FY12 as compared to Rs 1,335 crore in FY11 and incurred a loss of Rs 134 crore in FY12 as compared to a profit of Rs 60 crore in FY11.
The airline has financed all its aircrafts through sales and lease back agreements and has managed an average load factor of 79% in the first quarter of this year as compared to 76% in FY12.
Meanwhile, GoAir sources said the airline in in active talks with a foreign partner to sell 49% stake after the Indian government allowed foreign airlines to pick up stake in the local airlines.
