By Aditya Raghunath
Investing.com -- Mumbai-headquartered GoAir, a low-cost airline from the Wadia Group, has filed a draft red herring prospectus with SEBI (Securities and Exchange Board of India) for a Rs 3,600 crore IPO. The airline is planning a listing at a time when the aviation industry is down in the dumps thanks to the impact of the second wave of the pandemic.
GoAir has rebranded itself as GoFirst but the change in the name might not be of great help to the airline. The company has said that it has defaulted on aircraft lease agreement payments that could lead to legal action against it.
The company has a total debt of almost Rs 3,000 crore. Around 2,015 crore of the intended Rs 3,600 issue will be used to pay off a part of its outstanding payments. Of the remaining funds, Rs 279 crore will be used for replacing letters of credit issues to a few aircraft lessors and Rs 254 crore will be paid to Indian Oil Corporation Ltd (NS: IOC ). The balance Rs 1,052 crore will be used for expansion and other business needs.
GoAir’s much bigger competitor Interglobe Aviation Ltd (NS: INGL ) has said that it hasn’t defaulted on any of its payments. GoAir’s market share hasn’t moved beyond 10% for several years now. However, its maintenance costs are well under control for an airline its size.
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