IndiGo-rival Akasa Air to raise $1 billion for expansion
Akasa Air, India's latest entrant in the aviation sector, is planning to raise up to $1 billion over the next three years. The funds will be generated via a combination of debt and equity, according to insiders speaking to Moneycontrol. This fundraising effort aims at expanding Akasa Air's fleet size and increasing its market share. Rekha Jhunjhunwala, co-founder of Akasa Air and wife of late billionaire investor Rakesh Jhunjhunwala, is not expected to participate in the upcoming equity rounds.
A look at the current stakeholding
The Jhunjhunwala family and Vinay Dube, Akasa's co-founder and CEO, collectively own over 65% of the airline. However, the former holds a 40% stake as of now.
Ambitious expansion plans and potential investments
Akasa Air plans to add around 50 new aircraft to its fleet in the next 2-3 years, as part of its domestic and international network expansion. The airline's management estimates that approximately $1 billion will be required for this growth. A consortium led by Premji Invest and Claypond Capital is reportedly in advanced discussions to invest about $125 million into Akasa Air, which would secure them a minority stake in the airline.
Challenges and future prospects
Akasa Air's expansion plans have been hampered by supply chain issues, problems at aircraft maker Boeing, and increased competition for aircraft deliveries. The airline now expects deliveries of Boeing 737 MAX 10 by 2027. Despite these challenges, Akasa Air aims to serve around 20 million domestic passengers annually by the end of 2027, capturing a significant portion of the domestic market while also catering to nearly 1.5 million international passengers annually.
Akasa Air's financial performance
In its first year of operations, Akasa's parent firm SNV Aviation reported a net loss of ₹744 crore and an operating loss of ₹602.84 crore. The airline generated operating revenues of ₹777.85 crore, against operating expenses of around ₹1,380 crore. Despite these losses, Akasa Air's CFO Ankur Goel stated that the airline aims to become profitable in the next two years, with plans for aggressive capacity addition and expansion to new destinations.
