India’s Go First looks to raise $483mn in IPO in late 4Q21
Go First (G8, Mumbai Int’l) is looking to raise INR36 billion rupees (USD483.2 million) from its Initial Public Offering (IPO), the proceeds of which will be used to retire debt and pay oil companies and lessors, according to its latest filings with the Securities and Exchange Board of India (SEBI).
Citing an unidentified company source, India’s Business Standard newspaper reports Go First plans to launch the share sale by December 8, while it will launch the anchor issue a day earlier on December 7, 2021.
On November 5, 2021, Go First filed an addendum to its draft red herring prospectus of May 13, 2021, with the SEBI. According to this, the net proceeds of the IPO will be used for:
the prepayment of the scheduled repayment of all or a portion of certain outstanding borrowings;
the replacement of letters of credit issued to certain aircraft lessors towards securing aircraft lease payments and future aircraft maintenance with cash deposits of INR2.7 billion (USD37.4 million);
the repayment of dues to the Indian Oil Corporation Limited, in part or full, for fuel supplied to the company;
the part payment of INR4.439 billion (USD59.5 million) in outstanding aircraft leases to the following lessors: CDB Aviation, Jackson Square Aviation, and Aviation Capital Group special purpose vehicle ACG Acquisition Ireland III Ltd;
a part repayment of INR960.3 million (USD12.8 million) of INR1.346 billion (USD18 million) outstanding on November 2, 2021, to MTU Maintenance Zhuhai Co. Ltd for maintenance, repair, and overhaul (MRO) services.
Meanwhile, the company has posted a net loss of INR9.233 billion (USD123.9 million) for the six months ending September 30, 2021, according to a second addendum to the draft red herring prospectus filed with the SEBI on November 17, 2021, which provides an update on the airline’s financial status. Total revenue during the period amounted to INR12.029 billion (USD161.4 million) and total expenses to INR21.2 billion (USD284.5 million), down from INR38.8 billion (USD493.9 million) posted on March 31, 2021.
During September, October, and November 2021, Go-First and its subsidiaries had surplus cash after covering all flying costs and lease rentals. It said it was committed to inducting new aircraft as planned and deploying them in order of priority on profitable routes. “With this strategy, and the revival of demand seen in the market, the Group expects to generate sufficient cash in the subsequent period of, but not limited to, 12 months to meet all its obligations, including all operating expenditures, lease rents, banking, and statutory dues,” it said.
The Wadia Group-controlled airline said it had entered into agreements to purchase 144 A320-200Ns, of which 50 have been delivered. The group said it had already made USD200 million in pre-delivery payments.
According to the ch-aviation fleets advanced module, the airline has fifty-one A320-200Ns in service with 93 more to be delivered. It also operates a fleet of seven A320-200s.
India’s Economic Times, quoting well-placed sources, reports the airline has taken stringent cost-cutting steps to shore up its finances. That included cutting staff numbers by 1,000 to 4,400 employees in the last year and implementing a variable pay structure. This had resulted in a 25% reduction in staff costs that would show in decreased costs in subsequent quarters and when compared to pre-COVID staff expenses.
Go Airlines had 100% of its aircraft lease rentals payable between March to September 2020 and 80% payable between September to December 2020 deferred to be paid in 2022, 2023, and 2024, the sources said.