Nusli Wadia, patriarch of Bombay Dyeing and other Wadia group companies, is in talks to raise funds by way of an IPO for its struggling Go Airline. Industry insiders say while an IPO plan is on the cards, the sagging financial numbers may not be liked by investors. The airline is also in talks with a slew of private equities to sell its stake.

The airline has revived its plan for a public offering of shares, which has been deferred several times since 2017. It is reportedly Citigroup, ICICI Securities and Morgan Stanley as the bankers. The company is reportedly believes looking at raising long-term funds and reducing debt. The management have been told that given the current market sentiment, it is the right time to raise resources,” the official told ET.

The Wadia Group, which operates businesses including Bombay Burmah, Bombay Dyeing, Britannia, National Peroxide and Bombay Realty, will likely dilute 30% of its stake in GoAir. GoAir operates more than 300 daily flights and had 8.6% share of domestic passenger traffic. The airline flies to 36 destinations, including 27 domestic cities. It has carried 80 million passengers since starting in 2005.

Analysts say the aviation sector in India will witness consolidation in 2021 as the government expects to complete the sale of Air India in FY22 and Jet Airways’ new owners are in the process of re-starting its operations. Meanwhile, the Tata Group invested $37.7 million to buy an additional 32.7% stake in AirAsia India.

Observers feel the industry structure is going to be a key theme for investors this year since the potential change in industry structure could lead to a significant change in the competition.

Due to the Covid pandemic, the budget carrier has been struggling to continue its business as its operations have been impacted while debt levels are rising. Bank funding has also become limited for airlines amid the pandemic. In last August, GoAir appointed Kaushik Khona as its chief executive officer, replacing industry veteran Vinay Dube. Due to the corona pandemic, the airline is unable to repay loans to its bankers. The company has sought a moratorium on the loans and the promoters have also promised to bring in additional money which would be infused in the airline. The airline is ready to part with as much as 50 per cent of its stake, but one has to wait and watch whether any investor will offer a premium on the shares. If the IPO plan fails, the airline may fail to repay the bank loans even after the moratorium ends.