Sunday, November 11, 2018

GoAir for sale! Wadias looking to offload stake in airline business

The Wadia Group, which owns budget carrier GoAir, is looking for buyers for its 13-year-old airline, multiple sources aware of the development told FE. It is understood that the promoters have appointed a merchant bank in the UK to gauge buyers’ interest in the airline and be the transaction adviser for the deal if it materialises, according to sources in direct know of the development.

The decision to look for a buyer for GoAir at this point of time is prompted by a tough aviation market and inability of GoAir to expand its market share and network. This got expedited, as August onwards the fuel costs started rising, while the rupee weakened against the dollar. The promoters have always maintained that GoAir is a profitable, debt-free company; it posted a profit after tax of Rs 200 crore in FY17. The numbers for FY18 have not been declared so far by the company, but according to sources, GoAir has suffered huge losses, something which is in line with other aviation companies.

“GoAir is not truly profitable. Market dynamics have significantly changed and it is getting increasingly difficult for GoAir, as they do not have a robust network and no formidable market share. It has also grown at a very small pace and is a good consolidation target,” said an industry expert, adding that GoAir is stuck with a huge aircraft order (120 Airbus A320neos) but has not expanded its network either in domestic or international markets. As per sources, it is understood that it is re-negotiating the aircraft order contract with Airbus.
Responding to a FE query, a GoAir spokesperson said, “As a policy, we do not comment on market speculation and baseless rumors.”
11/11/18 Manisha Singhal/Financial Express