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The company rebrands itself into an ultra low-cost airline.

Mumbai, NFAPost: Taking into account its nosediving revenue amid the ongoing Covid-19 pandemic, GoAir has filed a draft red herring prospectus for a share sale to raise Rs 3,600 crore.

Besides rebranding itself as an “ultra-low-cost” airline, the Wadia group airline will use the proceeds to meet debt obligations, pay oil companies and for replacement of letter of credit to aircraft lessors for lease rental payment and future maintenance of aircraft.

GoAir derives its operating revenue from passenger revenue. The company also receives bit revenuew from ancillary products and services.

According to Arvian Research, GoAir revenue from the operations has grown at a CAGR of around 25% from fiscal 2018 to 2020.

“But it is a fact that the revenues nosedived due to the unexpected first and second waves of Covid-19 pandemic which extended the full period of FY21. The continued impact of the pandemic during FY 2022 will adversely affect its financial condition and liquidity. Going for IPO and raising funds will give a reprieve for the company,” said Arvian Research.

ICICI Securities, Citi Bank, Morgan Stanley will handle the share sale process. Known as GoAir since its inception in 2005, the airline changed its name to Go First on Thursday.

The airline, India’s largest airline by market share, is raising funds plans and rebranding in the midst of a second wave of Covid-19 that has decimated travel demand. Airlines have grounded aircraft, cut flights and deferred payments to ride out of the crisis.

According to documents filed with market regulator SEBI, the Wadia family and their Go Investments company hold 100% stake in the airline. At least 22.56% of Go Investment is pledged with a lender’s consortium.

In the nine-month ending December, the airline posted a loss of Rs 470 crore on total income of Rs 1438 crore. The airline in FY 2020 posted a loss of Rs 1270 crore on an income of Rs 7258 crore, according to consolidated financial statements that form a part of the IPO filing.

“We may be unable to successfully implement our ultra-low-cost carrier (or ULCC) model, due to a number of factors outside our control, including the continuing impact of Covid-19.” said the company’s DRHP.

Go Air will be the third Indian airline to list in stock exchanges. IndiGo and SpiceJet are listed. Jet Airways and Kingfisher Airlines were listed before shutting down. In 2015, IndiGo raised Rs 3,008 crore from public listing. Go Air currently holds a little more than eight percent market share of the domestic market.

India suspended air travel for two months for a national lockdown last year and resumed it on May 24 with caps on capacity.

GoAir had a high aircraft utilization during fiscal 2020, with average utilization of 12.9 hours per day and a load factor of 88.9%*. The Airline achieved the best on-time performance among the airlines in India for 15 consecutive months between the period September 2018 to November 2019.

GoAir also had the least number of cancellations at 0.3% during fiscal 2021 (as of January 31, 2021). It also had the lowest number of customer complaints at 0.3 per 10,000 customers (as against the industry average of 1.0 per 10,000 customers) during fiscal 2021 (for the period up to January 31, 2021)

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