Go Airlines puts IPO plan on hold amid raging third wave

Mumbai: Nusli Wadia Group has temporarily put on hold a ₹3,600-crore initial public offering (IPO) plan of its budget airline Go Airlines considering the third wave of Covid-19 and its impact on travel business, officials close to the group said.

The company is evaluating the pandemic situation led by the Omicron variant and is in discussions with its bankers about the IPO, they said.

“Bankers have been told to wait,” an official close to the developments said.

Top investors are watching the impact of Omicron spread on the health and travel plans of consumers before committing investments in the aviation sector, sources said.

Go Airlines (India) had filed for the IPO in May last year and received market regulator Sebi’s nod in August. In addition to the ₹3,600-crore public issue, it was planning to raise another ₹1,500 crore through a pre-IPO placement.

However, all fundraising plans have been put on hold for the time being and the group is expected to infuse additional capital in Go Airlines as it needs capital for operational expenses, sources said.

Wadia Group did not comment.

Some market experts believe the Go Airlines IPO will be launched sooner than later as the impact of Omicron, which is seen as a comparatively milder variant of the coronavirus, is not expected to last for long.

“While the virus is contagious, it has not been seen impacting mortality, so there is hope that the third wave should peak in India in coming weeks and thereafter end,” a fund manager said on condition of anonymity. “Restrictions by state governments on travel and safety protocols have hit travel, leading to postponements. But everyone is hopeful that there is no long-term impact on business. The aviation sector is bullish medium to long-term,” the person told ET.

Go Airlines was originally scheduled to do the IPO listing by December 8.

“The company was all set to go with the listing, which would have helped the company to further expand the operations, but the group decided to hold it or put off for the time being as it needs to settle some of the issues within,” said the official quoted first. “Also, with the latest wave of Covid, people travel only for essential things, which will further dampen demand for an airline company IPO.”

There was a hint of a family dispute that started mid last year when Jeh Wadia, son of Wadia Group chairman Nusli Wadia, resigned from boards of all group entities including Go Airlines and group flagship Britannia Industries. However, the group attributed the move to the decision of handing over operational controls to non-family professionals – like the way Varun Berry runs Britannia.

Jeh Wadia was managing director of the airline since its inception in 2004-05 and its trademark was under Go Holdings, a firm owned by Jeh. After his resignation, Wadia Group rebranded the entire operations as Go First as it mulled legal options on the trademark issue.

Experts believe investors are not overly worried about the long-term impact of the virus on the aviation sector and are betting on a rebound in travel later this year.

While the Omicron variant is seen as posing a “modest, near-term risk” for airlines led by widespread staffing shortages and delays, ongoing vaccinations and effective line of treatments should offset some of the downside, Citigroup analysts have been quoted in media reports.

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