Following the positive response to the IPO of InterGlobe Aviation, GoAir has revived its plans of entering the primary market. Promoted by Wadia Group – GoAir is the only other profitable airline besides IndiGo in India. GoAir is understood to have started the process of IPO with appointment of bankers for the IPO, Reuters said in a report. Although the ground work for GoAir IPO is yet to start, the company management is believed to be targeting a listing by March 2016.
GoAir IPO is expected to raise nearly INR10 billion. This compares to more than INR30 billion that InterGlobe Aviation aims to raise from its IPO. However, the airlines are as similar as chalk and cheese. In comparison to IndiGo’s fleet of 97 aircrafts, GoAir’s fleet is miniscule with just 19 planes. The airline had placed orders for 20 aircrafts with Airbus in November 2005 but has delayed taking delivery of the last unit in order to receive a fuel-efficient version Airbus A320 neo (new engine option) in April 2016.
GoAir’s small but profitable fleet
Despite its small fleet, the Wadia group company has big plans and flying on international routes is one of them. GoAir placed an order of 72 A320s units in June 2011 with an eye on overseas routes, although deliveries of these aircrafts are yet to start. Meanwhile, GoAir is doing a decent job of keeping operations profitable even with a small fleet. Aviation consultant CAPA estimates the airline earned at least INR840 million in the fiscal year ended March 2015.
Generally considered a risky business by investors, civil aviation has turned in India’s biggest IPO in three years. Driven by demand from institutional investors, IndiGo’s IPO was fully subscribed on the second day, although retail and high net worth investors have stayed away from the IPO so far. This conspicuous absence belies growing activity in India’s IPO market and presents the stark reality of promoters not leaving enough change on the table for retail investors.