Listing of India’s GoAir on hold

Plans by GoAir (G8, Mumbai Int’l) to raise INR36 billion rupees (USD482.6 million) via an initial public offering (IPO) have been put on hold by the Securities and Exchange Board of India (SEBI).

In a market filing earlier this week, the SEBI noted that GoAir’s share sale documents would be “kept in abeyance”. No further explanation was given, except that observations had been issued and that further explanations had been sought in a communication dated June 11, 2021.

According to The New Indian Express newspaper, the delay was due to “the regulator investigating irregularities with GoAir owner Wadia Group’s other holdings”. As per the rule, SEBI was “obligated to keep issuance of observations in abeyance for a period of 30 days or 45 days or 90 days or more, as the case may be,” the newspaper reported.

The airline was not immediately available for comment.

GoAir, which is rebranding as Go First (G8, Mumbai Int’l), planned to use the net proceeds of the IPO to repay outstanding borrowings and debt to Indian Oil Corporation Limited for fuel supplied. It also planned to replace with cash deposits the letters of credit it had issued to certain aircraft lessors towards securing lease rental payments and future maintenance of aircraft, according to its draft red herring prospectus filed with the SEBI on May 14, 2021. Due to the impact of COVID-19, the airline had defaulted on at least 24 aircraft leases totalling USD35.7 million. It had also defaulted on agreements with other suppliers and service providers, according to the investor risks described in the prospectus.

Majority-owned by the Wadia family, the “ultra-low-cost” carrier was saddled with obligations that totalled around INR81.6 billion (USD1 billion) on April 19, 2021, according to its prospectus.

Between April and June 2020, the company had placed 3,500 of its employees on furlough. It has also implemented graded pay cuts for management from 5% to 50%.

Go Air said, at the time of releasing its prospectus, it was renegotiating with Airbus over ninety-eight A320-200Ns due for delivery in a sale-and-lease-back (SLB) deal involving 144 of the type, of which 46 had so far been delivered. The plan had been to add eight new aircraft in Fiscal Year 2022 and 14 in the Fiscal Year 2023, but the carrier said it might have to delay or cancel the scheduled deliveries of its firm orders, which could lead to significant penalties under the purchase agreement.

According to the ch-aviation fleets advanced module, GoAir’s fleet by now comprises forty-eight A320-200Ns, of which thirty-one are in active service; and seven A320-200, of which two are in service. Lessors include AMCK Aviation, Aviation Capital Group, BOC Aviation, Bauhinia Aviation Capital, CCB Financial Leasing, CDB Aviation, Goshawk, ICBC Financial Leasing, Jackson Square Aviation, Minsheng Financial Leasing, and SMBC Aviation Capital, according to ch-aviation fleets ownership data.