GoAir, India's smallest airline by market share, is going big. On Wednesday, the Wadia Group-promoted airline announced a Rs 32,400-crore deal to purchase 72 Airbus A320neo aircraft.
Managing Director Jeh Wadia said the deal would be financed through a mix of equity, debt and sale or lease of planes. He said the airline had no immediate plans to raise capital or an initial public offer.
The GoAir-Airbus deal is the third big ticket order placed by an Indian carrier in the last few months. Last November, SpiceJet had ordered 30 Boeing 737-800s, followed by rival low cost carrier IndiGo with a record 180 Airbus A320 neo planes two months later.
The A320neo is a fuel-efficient aircraft with 15 per cent less fuel burn. GoAir will be among the first-launch customers of the aircraft and will receive 15 planes every year starting 2015, said Wadia. This is a firm order to acquire planes. The formal acquisition agreement will be signed during the Paris air show, beginning next week.
“We are Ebitda-positive and have made net profit for the last two years,'' said Wadia. The Centre for Asia Pacific Aviation (CAPA) estimates that the airline made Rs 40-50 crore profit year. Wadia, however, refused to comment on the CAPA figures. Of the three listed carriers, only Spice Jet made an annual profit of Rs 101 crore, while Jet Airways and Kingfisher posted losses.
Wadia said the surge in fuel prices was not a hindrance to its expansion plans. “We are very positive about the aviation industry. There is huge potential,” he said. Existing regulations allows GoAir to fly abroad because it has completed five years but Wadia ruled out international operations in the near future.
Both in terms of fleet size and traffic, GoAir is smaller than its peers. Its market share in April was 6.4 per cent — less than half of that of Spice Jet and a third of IndiGo. Wadia said fares in India are cheap and expects a 10-15 per cent rise in fares this year.
Fares are dependent on season and peak travel months like November-January and April-June see higher fares compared to other months, he said. Wadia said the airline was also considering launching more 'red eye' flights (flights in wee hours) between metros. The airline hopes it will be able to attract passengers who opt for overnight train journeys to take their flights with low fares.
