GoAir plans to sell stake to investors

The Wadia group-promoted low-cost airline GoAir is planning to sell 20-26% stake to a group of strategic and financial investors. GoAir managing director Jeh Wadia said, “The airline is currently in negotiations with the shortlisted investors and expects to close the deal in a few months.” The exact quantum of divestment will depend on the quality of the offers, he said. The airline currently has a fleet of seven A320 aircraft with 20 more on order. The offers on the table are difficult to ignore, though the airline will look for strategic partners who bring in more than just cash, Mr Wadia said. The interest in the airline industry is despite the fact that domestic carriers been burning huge amounts of cash over the past year, which has seen big capacity additions from all eight airlines in the business. The airlines are collectively expected to lose about $300 million by the end of the financial year.

However, there is still bullishness among investors who believe in the long-term potential for the airline industry in the country. This is especially true of low-cost carriers, which aim to convert train travellers to first-time fliers. GoAir’s rivals, SpiceJet and Air Deccan, have both been able to sell this long-term vision to financial investors in the past few months. GoAir, so far funded by the Wadia group, has a marketshare of about 4%. The airline has been conservative in its expansion plans compared to other domestic airlines. It has been positioned as the people’s airline with the aim of ‘commoditising air travel’. The airline made news recently by selling 2 lakh tickets this summer at Rs 99. Mr Wadia has also announced plans to expand his aviation interests by launching a cargo airline and an aircraft maintenance company. These ventures are currently being evaluated, it is learnt.

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