GoAir appears to be easing up on its fleet expansion plans. The Wadia group airline has decided to scale back fleet expansion because of many reasons.
But refutes the buzz that a stake sale is imminent
NEW DELHI: GoAir appears to be easing up on its fleet expansion plans. The Wadia group airline has decided to scale back fleet expansion because of many reasons: existing policies, high ATF prices leading to increased cost of operations, and slow development of aviation infrastructure. It now plans to buy 18 new aircraft by March 2009 against 20 projected earlier and 34 new aircraft by March 2011 against 50 projected earlier.
The move comes even as the airline evaluates proposals from private equity players for acquiring minority equity in the company.
Is paucity of funds one of the reasons for this scale-down, then?
Jeh Wadia, managing director, GoAir, would have us believe otherwise. “We need to be patient. We have scaled down our aircraft acquisition plans due to various reasons such as taxation, slow infrastructure development, etc, but our breakeven projections remain intact. Breakeven should be achieved in 2008 and we could possibly look at listing the company the year after,” Wadia said announcing the acquisition of GoAir’s first Airbus aircraft on Thursday.
GoAir has placed an order for 20 new aircraft with Airbus, translating to a $1.2 billion payout over 18 months. Wadia said this money was being raised via multiple routes, including sale of equity and raising debt. As of now, the company has four leased aircraft besides the Airbus added on Thursday. Wadia said the number of airports of operation would stay constant despite the fleet enhancement; instead, the frequency of flights from each of these airports would increase.
Wadia said: “As of now, GoAir is 100% funded by the Wadia family. We aren’t looking at offloading equity, but some investors are looking at buying into the company. We have a certain value in mind and can sustain the business on our own till we get that value.”
He said the company is still vetting proposals from bidders, but a stake sale is unlikely to happen soon. “Potentially,” the company may offload 26% stake in favour of a PE investor or a strategic partner, but it has received proposals in the past for up to 45% equity stake, he added.
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