GoAir looks to grow fleet, market share ahead of IPO2 min read . Updated: 23 May 2017, 02:16 AM IST
GoAir plans to increase its number of planes from the current 24 to 27 by July, and another 10 aircraft by the end of March 2018
New Delhi: The Wadia Group-owned Go Airlines (India) Ltd, which operates low-fare airline GoAir, plans to increase its fleet size and market presence before hitting the market with an initial public offering (IPO), a person familiar with the company’s plans said.
This might happen over the next few months, added this person who asked not to be identified. GoAir has a 24-aircraft fleet and a 8.5% market share.
It will add three aircraft by July and another 10 by the end of March, this person said.
It is critical to have the “right size" before the airline can sell its story to the investors, this person added.
GoAir recorded a profit before tax of around Rs190 crore in 2015-16 and was profitable in the year ended 31 March as well, according to the airline. GoAir declined to comment on its IPO plans.
GoAir competes directly with no-frills carriers SpiceJet and IndiGo, both of which are listed. IndiGo owner InterGlobe Aviation Ltd was the most recent to list. IndiGo, with about 134 planes in its fleet and a 40% market share, is valued at about Rs37,000 crore.
SpiceJet, with a 49-plane fleet and a 13% market share, is valued at about Rs6,100 crore
Both airlines have seen their stocks shoot up this year as oil prices remained muted.
Since 1 January, shares of IndiGo have risen about 27% and those of SpiceJet about 80%. BSE’s benchmark Sensex has risen 14.79% in the same period.
“I think GoAir wants to clinch a much better valuation than SpiceJet keeping in mind that it doesn’t have a negative net worth," an analyst who did not wish to be identified said.
SpiceJet had a negative net worth of about Rs400 crore as of January.
GoAir is “very keen on an IPO", the analyst added.
A second analyst who also asked not to be identified said that a successful share sale for GoAir was all about “finding the right window".
Still, GoAir will remain significantly smaller than IndiGo which is adding over 24 planes in a year alone to its fleet, this person added. “IndiGo will add a GoAir every year."
India’s air passenger traffic is growing at the fastest pace in the world and has doubled to nearly 100 million over the past six years.
It is expected to grow at double digit this year as well although it has slowed marginally.
GoAir plans to start international operations this year, with flights expected to the Gulf, South-East Asia, Central Asia and China.
On Monday, shares of IndiGo fell 1.91% to Rs1,044.05; shares of SpiceJet fell 6.56% to Rs102.50 on a day the Sensex rose 0.35% to 30,570.97 points.