Go Airlines Seeks SEBI Nod For Rs 3,600-Crore IPO

Go Airlines India Ltd. has sought the market regulator’s approval to raise as much as Rs 3,600 crore through an initial public offering as the budget carrier aims to pare debt.

GoAir proposes an IPO of equity shares through the 100% book-building process in accordance with Securities and Exchange Board of India regulations. The company will offer fresh equity shares aggregating up to Rs 3,600 crore, according to its draft red herring prospectus. The airline, which earlier this week was rebranded as Go First, may also consider a pre-IPO share issue of up to Rs 1,500 crore, prior to filing the RHP. The IPO size, it said, will be cut if the pre-IPO placement happens.

ICICI Securities Ltd., Citigroup Global Markets India Pvt. and Morgan Stanley India Co. have been appointed as global coordinators and book running lead managers to the IPO.

GoAir said it plans to use the net proceeds for prepayment or scheduled repayment of all or a portion of certain outstanding borrowings of Rs 2,015.8 crore, replacement of letter of credits, issued to certain aircraft lessors for securing lease rental payments and future maintenance of aircrafts, with cash deposit, repayment of dues to Indian Oil Corp., in part or full, and for general corporate purposes.

“The reduction of our overall debt will reduce interest costs and improve our lease rate factors,” the company said in its DRHP. That, it said, is expected to improve its financial position.

GoAir's Fleet

The airline, which commenced operations in 2005, has 56 aircraft in its fleet as of February. Of these, 46 aircraft are A320 Neo models and 10 are A320 CEO models.

GoAir has also placed orders for 144 Airbus A320 Neo aircraft as part of its growth plan. Of these, the airline has already taken delivery of 46 such aircraft and is awaiting the rest.

The move to launch an IPO comes when a severe second wave of coronavirus infections once again ravaged travel demand, stalling a nascent recovery in India’s airlines. The mounting cases have also kept India’s equity investors on the edge. The Covid-19 led disruptions have had a significant impact on its operations and led to a decline in revenue and profitability.

GoAir's Financials

GoAir suffered a net loss of Rs 470 crore, and reported revenue of Rs 13,194 crore in the nine months ended December 2020. It has a negative net worth amounting to Rs 1,916 crore and its current liabilities have exceeded current assets by Rs 4,362 crore.