GoAir awaits Air­bus de­liv­ery sched­ule to de­cide IPO tim­ing

The Pak Banker - - COMPANIES/BOSS -

Go Air­lines (In­dia) Ltd, which runs low-fare car­rier GoAir, is wait­ing to hear from plane maker Air­bus SAS on the de­liv­ery sched­ule of its fuel-ef­fi­cient A320­neo jets be­fore de­cid­ing on the tim­ing of a pro­posed share sale.

GoAir is ex­pected to start tak­ing de­liv­ery of its first A320­neos by May and is ex­pected to take de­liv­ery of at least 10 of the jets in the next fi­nan­cial year, ac­cord­ing to two peo­ple aware of the situation, who spoke on con­di­tion of anonymity.

The air­line, founded by the Wa­dia fam­ily, has placed an or­der for 72 A320­neo planes that of­fer 15-20% sav­ings on jet fuel, which makes up the largest chunk of spend­ing by air­lines.

Ex­perts say that the fuel-ef­fi­cient A320­neos will boost GoAir's profitabil­ity and share sale prospects.

GoAir's ini­tial pub­lic of­fer (IPO) tim­ing is di­rectly linked with the in­duc­tion of A320­neo planes into its fleet, said one of the two peo­ple cited above, adding that it would fi­nal­ize the share sale plan once it re­ceives clar­ity on the de­liv­ery sched­ule from Air­bus.

A GoAir spokesper­son de­clined to com­ment. In an e-mailed state­ment, Air­bus said it does not share de­liv­ery sched­ules and that is up to cus­tomers to do so. Air­bus said it has not made pub­lic the outlook for A320­neo de­liv­er­ies in 2016. Over­all, it is tar­get­ing the de­liv­ery of 650 air­craft of all types (A320s, A320­neos, A330s, A350s, XWBs and A380s) in 2016, the plane maker said.

GoAir, which has an 8% share of do­mes­tic air traf­fic, is ex­pected to post a net profit of around $20-25 mil­lion in the year end­ing 31 March, avi­a­tion con­sult­ing firm Capa In­dia said in a re­port re­leased this year. Capa In­dia also said GoAir is ex­pected to be listed on the stock ex­changes shortly.

"Banks have been talk­ing to the com­pany re­gard­ing their IPO. How­ever, they haven't for­mally ap­pointed banks. Since for­mal work is yet to be­gin on the IPO, the deal launch is def­i­nitely some time away," said an in­vest­ment anonymity.

"The tim­ing will de­pend a lot on macro fac­tors such as crude pric­ing, which IndiGo got right with its launch," he said. In Oc­to­ber, the IPO of In­ter­Globe Avi­a­tion Ltd, owner of In­dia's largest and most prof­itable air­line IndiGo, re­ceived de­mand for 6.14 times the shares it of­fered in­vestors, as fi­nan­cial in­sti­tu­tions and rich in­di­vid­u­als sought to tap the world's fastest grow­ing avi­a­tion mar­ket. Shares of In­ter­Globe Avi­a­tion rose 14.7% above their of­fer price of Rs.760 on the air­line's trad­ing de­but.

IndiGo took de­liv­ery of Asia's first A320­neo air­craft on 10 March from Air­bus. On 29 Fe­bru­ary, IndiGo said Air­bus had con­firmed that it will de­liver 24 A320­neo air­craft by March 2017.

In­duc­tion of A320­neos is also crit­i­cal for IndiGo, which has been con­sis­tently prof­itable since 2009, a feat un­ri­valled by any other do­mes­tic air­line, to main­tain its dom­i­nant mar­ket share in In­dian avi­a­tion.

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