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Rediff.com  » Business » GoAir readies foreign flight with IPO on mind

GoAir readies foreign flight with IPO on mind

July 13, 2016 11:03 IST

GoAirA ministry official said the airline would be given seats on almost all routes, provided India had bilateral agreements with those countries.

Budget airline GoAir has firmed up plans to fly abroad as it prepares for listing in the current financial year.

In a two-phase plan to the civil aviation ministry on June 24, the airline has sought permission to fly next summer to Phuket, Bangkok, Sharjah, Kuwait, Kunming and Guangzhou from its two hubs in Delhi and Mumbai.

Next winter, the airline wants to connect Kochi, Chennai and Hyderabad with Dammam, Kuwait, Muscat and Sharjah.

“We require allocations for proper planning and hence we request approval for designation as an Indian carrier to fly the routes mentioned,” Chief Executive Officer Wolfgang Prock-Schauer wrote to the ministry.

A ministry official said the airline would be given seats on almost all routes, provided India had bilateral agreements with those countries.

Industry sources said GoAir intended to list in the third quarter of 2016-17 to raise around Rs 1,000 crore (Rs 10 billion) and that made a case for it to speed up its international plans.

According to consultancy firm CAPA, GoAir reported a profit of around Rs 166 crore in 2015-16.

On Tuesday, the airline signed an MoU with aircraft manufacturer Airbus for 72 A320Neo planes worth around $7.5 billion at list prices.

The airline already has a contract for 72 A320Neos, two of which have been delivered.

On Monday, Bloomberg reported the airline was in final rounds of talks with aircraft manufacturer Airbus for 70 A320Neo planes worth around $7.5 billion at list prices.

The airline already has a contract for 72 A320Neos, two of which have been delivered.

“The airline has a major expansion plan in mind, which could be a possible trigger for an early listing,” said an industry source.

Go Air“For an Indian airline it makes sense to fly the shorter routes of West Asia and Asia Pacific as most of the volume comes from those routes.”

Other low cost carriers like SpiceJet and IndiGo, which started international operations in 2010 and 2011, respectively, have structured their international plans around short-haul routes.

A GoAir spokesperson refused to comment on the airline’s international foray and listing plans.

“If GoAir starts a successful international operation, its value could increase substantially in the event of an IPO, especially if it has a foreign carrier to back it up.

"It is important to know that the initial strategy of the founder (Wadias) was to create an airline with the ultimate goal of an exit.

"The IPO could be the beginning of such a strategy,” said Steve Forte, independent analyst and former CEO of Jet Airways.

In its preparation for the IPO, GoAir in April had made Prock-Schauer CEO and managing director.

“Apart from one rare exception, they have been going through CEOs like a revolving door. GoAir will be a good investment for a foreign carrier wishing to establish a foothold in India,” said Forte.

Arindam Majumder in New Delhi
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