MUMBAI: GoAir, part of the Nusli Wadia Group, has appointed investment bank JPMorgan to scout for a foreign strategic partner to buy up to 49% in the low-cost passenger carrier, four people close to the development said, signaling the eagerness of Indian carriers to source capital in order to scale up their operations"GoAir is in talks with three to four overseas airlines from Europe and the Middle East to sell up to 49% stake," an investment banker with direct knowledge of the development said.
"The company is in talks with German carrier Lufthansa and Dubai-based Emirates and Qatar Airways, among others," said a second investment banker involved in the deal. "It is very early to divulge more details," he said. "As a company policy, the airline does not comment on market speculation," GoAir's spokesperson said. The Wadia family owns 100% of GoAir. Many Indian carriers have been scouting for foreign strategic partners after the government allowed foreign carriers to own up to 49% in Indian passenger carriers. On April 24, India's largest passenger carrier by revenue and number of passengers carried, Jet Airways, signed an agreement with Abu Dhabi governmentowned Etihad Airways to sell 24% stake for Rs 2,060 crore to pare its debt. The two carriers said it would make Abu Dhabi a hub for its international flights to Europe.Etihad paid a 32% premium to the price of Jet's shares on the BSE, indicating interest in the Indian aviation sector as the market is growing at 10% and the government has ambitious plans to build new airports and expand existing ones. "The European carriers are losing share of the Indian market to Middle East carriers," says a managing director of a foreign investment bank. "So, European carriers need to counter this by partnering with Indian carriers to connect more cities and towns." Last month, Lufthansa denied any interest in purchasing a stake in GoAir. But, the airline had said it needs to have a low-cost airline in the Asian region and may partner with an existing carrier in the region to deal with the onslaught of the Middle East airlines which are taking away traffic at a brisk pace.
"With a global partner, GoAir will be able to realign its routes to feed into the bigger airports from where outbound Indian fliers can reach their global destinations through the partner airline's network," Amber Dubey, partner and head at KPMG. "This kind of end-to-end service creates a win-win deal for passengers and the airline partners alike." On Tuesday, Akbar al Baker, head of Doha-based carrier Qatar Airways, said the carrier wanted to have a co-operative alliance with India's largest budget carrier and market leader IndiGo.
The Wadia family, whose interests range from real estate to textile, has been trying to raise money as it rapidly expanded its fleet and connected more destinations. Aviation analysts said GoAir has an advantage as it can quickly scale up as it has placed large orders with aircraft maker Airbus and can provide connectivity with the smaller cities and towns allowing its foreign partner to use it as a hub-and-spoke model. Air Asia has recently said it would start its operations in Indian by connecting secondary cities and towns. GoAir, with 7% share, flies to 21 destinations and has 750 weekly flights. In January, GoAir, which wants to fly overseas, has asked the government to relax a stipulation that carriers seeking to fly to international destinations must have at least 20 planes. The Indian government allows only carriers with 20 planes or more to fly overseas.
http://articles.economictimes.indiatimes.com/2013-05-09/news/39143997_1_goair-indian-carriers-wadia-family
"The company is in talks with German carrier Lufthansa and Dubai-based Emirates and Qatar Airways, among others," said a second investment banker involved in the deal. "It is very early to divulge more details," he said. "As a company policy, the airline does not comment on market speculation," GoAir's spokesperson said. The Wadia family owns 100% of GoAir. Many Indian carriers have been scouting for foreign strategic partners after the government allowed foreign carriers to own up to 49% in Indian passenger carriers. On April 24, India's largest passenger carrier by revenue and number of passengers carried, Jet Airways, signed an agreement with Abu Dhabi governmentowned Etihad Airways to sell 24% stake for Rs 2,060 crore to pare its debt. The two carriers said it would make Abu Dhabi a hub for its international flights to Europe.Etihad paid a 32% premium to the price of Jet's shares on the BSE, indicating interest in the Indian aviation sector as the market is growing at 10% and the government has ambitious plans to build new airports and expand existing ones. "The European carriers are losing share of the Indian market to Middle East carriers," says a managing director of a foreign investment bank. "So, European carriers need to counter this by partnering with Indian carriers to connect more cities and towns." Last month, Lufthansa denied any interest in purchasing a stake in GoAir. But, the airline had said it needs to have a low-cost airline in the Asian region and may partner with an existing carrier in the region to deal with the onslaught of the Middle East airlines which are taking away traffic at a brisk pace.
"With a global partner, GoAir will be able to realign its routes to feed into the bigger airports from where outbound Indian fliers can reach their global destinations through the partner airline's network," Amber Dubey, partner and head at KPMG. "This kind of end-to-end service creates a win-win deal for passengers and the airline partners alike." On Tuesday, Akbar al Baker, head of Doha-based carrier Qatar Airways, said the carrier wanted to have a co-operative alliance with India's largest budget carrier and market leader IndiGo.
The Wadia family, whose interests range from real estate to textile, has been trying to raise money as it rapidly expanded its fleet and connected more destinations. Aviation analysts said GoAir has an advantage as it can quickly scale up as it has placed large orders with aircraft maker Airbus and can provide connectivity with the smaller cities and towns allowing its foreign partner to use it as a hub-and-spoke model. Air Asia has recently said it would start its operations in Indian by connecting secondary cities and towns. GoAir, with 7% share, flies to 21 destinations and has 750 weekly flights. In January, GoAir, which wants to fly overseas, has asked the government to relax a stipulation that carriers seeking to fly to international destinations must have at least 20 planes. The Indian government allows only carriers with 20 planes or more to fly overseas.
http://articles.economictimes.indiatimes.com/2013-05-09/news/39143997_1_goair-indian-carriers-wadia-family
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