GoAir flies high with 36% profit
Gains from sale and leaseback of aircraft helped GoAir post a 36 per cent increase in net profit in 2016-17 at ~205.25 crore against ~150.24 crore in the previous year.
GoAir’s growth has been modest in comparison to its peers and the airline added its 20th aircraft in June. In 201617, it made a net addition of four Airbus A320 aircraft and capacity addition led to a 20 per cent increase in operating revenue to ~3,309 crore.
The airline added Hyderabad to its network and launched flights from Kolkata to Jaipur and Ahmedabad.
A five-fold increase in GoAir’s other income resulted in the higher profit. Other income included ~215 crore profit on the sale and leaseback of Airbus A320neo aircraft.
At the end of March, GoAir had a debt of over ~2,300 crore, including loans and inter-corporate corporate deposits, and it incurred ~154 crore as finance costs.
The Wadia group-owned GoAir is unlisted. Its results for 2016-17 are disclosed in its annual report filed with the ministry of corporate affairs. GoAir did not respond to a query on the topic.
“In February, we had estimated GoAir’s 2016-17 profit at $18.5-20 million, excluding sale and lease profit and compensation from engine manufacturer Pratt & Whitney. We are not surprised with the higher profitability, given the increase in other income. The other income is also in line with our expectations,” said Kapil Kaul, chief executive officer (South Asia) of aviation consultancy CAPA.
GoAir’s network spans 23 cities and the airline’s strategy has been to increase flight frequency on existing routes. Two weeks ago it announced the induction of four A320neos, which will enlarge its fleet to 31, and 30 extra flights every day.
The airline is yet to finalise its international network though initial plans are to link Maldives and Phuket to Mumbai. The airline’s fleet induction plans were affected by problems surrounding engines for the A320neo, which resulted in the delay of GoAir’s international foray.
Sources said the recent induction of A320neo aircraft by GoAir and IndiGo suggested a resolution of the engine issues and this would result in normal aircraft deliveries.