Wadia group-owned Go First plans to hit the public markets by the end of June or early July.
The airline which had got approval from market regulator Sebi for its IPO in 2021 had held back its IPO first due to the emergence of Omicron and then to avoid a clash with the mega IPO of Life Insurance Corporation (LIC).
Sources said that the management of Go First is preparing to restart the roadshows and investor presentations. “Given the feedback from bankers, we are ready for an IPO,” a person aware of the airline’s plans said, adding that the company will not reduce the issue size.
The airline plans to garner up to INR 3,600 crore through the sale of shares, according to the Draft Red Herring Prospectus (DRHP) plans to utilise a primary portion towards prepayment or scheduled repayment of all or a portion of certain outstanding borrowings, vendors, and aircraft lessors.
Industry sources said that buoyancy in domestic traffic has encouraged the merchant bankers of the company to relook at the IPO. This is despite heightened challenges of record-high fuel prices and a weaker rupee against the dollar which can hit the valuations of an airline IPO.
The airline had delayed its IPO plans in August 2021 after the Securities and Exchange Board of India called the promoters, the Wadias, for a pending inquiry. In December 2021, GoFirst further delayed the offering due to the outbreak of the Omicron wave and then the Russia-Ukraine war that started in February.
“You can never bet on a peak market or all things going right for an IPO. Merchant bankers were waiting for IPOs of LIC and Delhivery. Bankers are quite eager and optimistic. “We are all prepared and we would be open for the listing as soon as possible,” the person said.
As part of its listing preparation, the airline has resumed its capacity expansion plans and plans to add new aircraft starting in August. It plans to add 10 new Airbus A320 Neos by the end of March 2023.
Go First is flying more as the demand in the domestic sector has improved significantly due to the fall in the number of COVID cases. The airline is operating around 300 flights daily as compared to 288 flights in 2019.
“The buoyancy of traffic has definitely picked up. May has been better than April in terms of booking and advance booking has also become stronger. The top line and occupancy look encouraging. We still expect around 10-15% increase in demand,” a senior executive of the airline said.
However, the airline is yet to return all of its current fleets. Out of 56 aircraft, the aircraft is using around 45 with nine A320Neo still parked. “We have 10 more aircraft to be deployed. All aircraft are expected to be operating by the end of June,” the executive said.
Go First is looking to pitch to investors that with the backing of a strong promoter group, the airline can emerge as a No 2 in the Indian domestic market but with a cost structure which is lesser than market leader IndiGo.
The financial distress of SpiceJet has hampered its fleet induction plans allowing Go First to climb to the second spot with a market share of 9.8% in March- slightly higher than 9.5% of SpiceJet.
“If we don’t aggregate the four Tata group airlines which are functioning as separate entities as of now, the airline has been second in the pecking order with a consistent market share of around 10%. Even in May, till date average market share of Go First has been little less than 12%,” a senior executive of the airline said.
The increase in market share of Go First, the executive said is also a factor in the increase in utilisation, deployment of aircraft and selection of network. Currently, the fleet utilisation is at around 13.2 hours and the airline intends to increase it further.
The airline has consciously decided not to spread its network thin but increase its strength where it operates. Almost with a similar market share the airline operates to 29 destinations as compared to 72 destinations of SpiceJet. “We try to remain at a meaningful scale where we are present and give more options to customers rather than spreading thin and wide,” the executive said.
Aircraft fleet of Go First
Low-cost Indian air carrier GoFIRST earlier called GoAir is mulling inducting more A321 Neo aircraft into its fleet. The airline is also looking at converting its entire fleet to A321 Neos.
The airline currently has 52 A320 Neos and 6 A320 Ceos in its fleet. The airline may induct around 3-4 A321 Neos every year with total aircraft delivery of 10 aircraft per year until the financial year 2024 and another 72 aircraft will be delivered between the financial year 2024 and financial year 2027.
The A321 Neo aircraft are known to have a longer range, can seat 25% more passengers and are 20% more fuel-efficient than the A320 Neos.
According to data from ch-aviation.com, there are currently 58 aircraft in Go First’s fleet. This figure consists entirely of Airbus narrowbodies, whose average age clocks in at an impressive 6 years old.
This is slightly dragged down by the six A320ceos that remain in the fleet, which are being replaced by newer A320neos as they arrive. The 52 A230neos have an average age of just 3.4 years old.
Go First configures each of its aircraft types slightly differently when it comes to onboard seating. Of course, being an ultra-low-cost carrier, what remains consistent is the idea of an all-economy layout. However, the older A320s have slightly fewer seats, namely 180.
Meanwhile, the newer A320neos have an extra row of seats onboard. This brings their total capacity to 186 passengers.
India’s aviation sector has been recovering as people resume leisure and official travel after over two years of pandemic-related restrictions. However, the price of aviation fuel, the biggest cost component for airlines, has risen sharply, and competition is set to intensify as two additional carriers take to the skies.
Like other airlines, GoFirst is betting on rising demand for leisure travel during the summer vacation to combat rising fuel prices, people aware of the matter said. The carrier expects the government to lift fare caps and include aviation turbine fuel in the goods and services tax regime to help the aviation sector.