The Hindu Business Line : GoAir to induct six Airbus aircraft in next 12 months

In spite of a slowdown in the airline industry, GoAir has said it will induct six new Airbus aircraft during the next 12 months. It had ordered 20 from the aircraft maker in a deal valued at $1.5 billion.

GoAir Managing Director, Mr Jeh Wadia, told Business Line that the airline will continue to reduce costs and even staff to stay “small and lean” as it tries to wade through one of the most turbulent times in the airline industry. “It is a deliberate attempt to keep the staff as well as the fleet lean to weather such storms,” Mr Wadia said.

Sources close to the airline claim that GoAir has let go at least 30 per cent of its staff and has pulled out of several routes as it battles the rising aviation turbine fuel prices. Several airlines, including SpiceJet, Kingfisher Airlines and Simplify Deccan, have reduced flights on key routes as well as the staff during the past few weeks.

Lean season

Mr Wadia also attributed the pull out from several routes to the onset of the lean season. “There is no reason for us to keep flying all the routes even during the lean season,” he said.

He, however, claimed that the airline has a PLF (passenger load factor) of between 76 per cent and 78 per cent.

Mr Wadia said the airline is still in talks with several investors, including PE (private equity) funds to raise funds but it would take a decision “on its own terms”. The airline is likely to zero in on an investor later this week.

Mr Wadia had earlier said that he was willing to shed up to 26 per cent to investors to raise a substantial amount. But an analyst with a brokerage firm said that good valuations for airlines would be hard to come by.

“If an airline is desperate for funds, it will have to raise debt at a higher interest rate or give more equity,” the analyst said.

Mr Wadia said the six leased aircraft will go back to the leasing companies during the next 12 months and they will be replaced with those it had ordered from the aircraft manufacturer.

The remaining aircraft will be inducted in a phased manner within the next three years.

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