GoFirst to expand international operations with IPO proceeds: Sources

GoFirst, the budget airline previously known as GoAir, is looking to expand overseas operations after its Rs 3,600 crore initial public offering is completed, people close to the company told Moneycontrol. 

The airline plans to start flying to Nepal, Sri Lanka, Malaysia, Cambodia and Vietnam and also increase flights to countries in West Asia, they said.

The budget airline plans to launch its delayed IPO in the second quarter of this financial year. Morgan Stanley, Citibank and ICICI Securities are the merchant bankers for the IPO. The company plans to raise 75 percent of the funds through qualified institutional placement, the people said.

GoFirst plans to use Rs 2,200 crore raised from the IPO to reduce debt and repay lessors. The remaining Rs 1,600 crore will be deployed to increase operations in India and internationally.

“GoFirst has trained its pilots to fly to Kathmandu and will first look at launching flights to Kathmandu and Colombo,” one person said. The airline plans to increase flights to countries in West Asia including the United Arab Emirates, Oman, South Korea, Kuwait, and Turkey.

GoFirst expects domestic passenger traffic to surpass pre-Covid levels by 5-10 percent by the second quarter of FY23 provided there is no new Covid-19 wave. The airline estimates international traffic will pick up significantly in the second quarter of FY23.

Jet fuel

The airline anticipates aviation turbine fuel prices will start falling from June 1 as international crude oil prices stabilise, another person said.

ATF prices have shot up almost 90 percent since May 2021 and have been a cause of concern for Indian airlines. Jet fuel prices were increased by 5.3 percent on May 16 – for the 10th straight time – and ATF now costs Rs 1,23,039.71 per kilolitre in New Delhi.

Although high ATF prices have also led to an increase in ticket prices when compared to last year, customers are continuing to fly.

“GoFirst has seen a rise in advance bookings for the last few months. People have already started booking flights for July and August despite higher prices when compared to last year,” one person said.

He added that coupled with the rise in advance bookings, customers are booking tickets a month or 45 days in advance.

Corporate travel on GoFirst has revived to pre-Covid levels. Flights on large metro routes now carry about 50 corporate passengers.

GoFirst plans to convert its entire fleet of Airbus A320 Neos and Airbus A320 Ceos to Airbus A321 Neos. The airline currently has 52 A320 Neos and 6 A320 Ceos in its fleet. GoFirst plans to take deliveries of 10 aircraft per year until FY24 and another 72 aircraft will be delivered between FY24 and FY27.

The airline delayed its IPO plan in August 2021 after the Securities and Exchange Board of India called the promoters, the Wadias, for a pending inquiry. In December 2021, GoFirst further delayed the offering due to the outbreak of the Omicron wave and then the Russia-Ukraine war that started in February.