Financial Round Up
IndiGo’s IPO and expired 250 A320 order
July 6th 2015
InterGlobe Aviation, owner of Indian budget carrier IndiGo Airlines, is seeking to raise more than $400 million in an initial public offering (IPO) to fund the Gurgaon-based carrier’s continuing expansion. Read More »
IndiGo, co-founded in 2006 by entrepreneur, Rahul Bhatia, and former U.S. Airways chief, Rakesh Gangwal, is India's largest and most profitable airline. Its listed rivals, low-cost carrier, SpiceJet, and full-service carrier, Jet Airways, have not reported annual profits since 2011 and 2008, respectively, while national carrier, Air India, is notoriously loss-making.
IndiGo specialises in placing large orders for jets and selling them on to lessors before renting them back to reduce capital costs. It has denied the sale-and-leaseback model was the main driver of its profits.
InterGlobe said last week the terms of IndiGo’s provisional $26 billion order for 250 A320neos, signed last October, had expired, but that the two companies remained in talks about acquiring a "significant" number of A320neos.
"Although the term sheet has expired we remain in active discussions concerning the potential acquisition of a significant number of aircraft from the A320neo family," it said in the draft prospectus for its initial public offering, adding there was "no assurance" that it would be able to negotiate a new aircraft order with Airbus. Airbus chief executive, Fabrice Bregier, said he was “not worried about this” and described the delay to the manufacturer’s biggest-ever order as a technical one related to the timing of IndiGo’s IPO.
