Azim Premji’s $130M Investment in Akasa Air to Challenge Ratan Tata’s Air India

Azim Premji’s Premji Invest and Ranjan Pai’s Claypond Capital are set to acquire a significant stake in Akasa Air with a $130-140 million investment. This move strengthens Akasa’s growth amid challenges like Boeing delivery delays and financial losses. The Jhunjhunwala family retains a 38% majority stake, ensuring continuity in leadership. Akasa’s expansion aims to intensify competition with Ratan Tata’s Air India in India’s aviation sector.

By Anshika Johari Dec 13, 2024, 14:52 IST

Indian aviation is set for a shakeup as Azim Premji’s Premji Invest and Ranjan Pai’s Claypond Capital lead a funding round to secure a significant minority stake in Akasa Air, the Bengaluru-based budget airline. With an investment of $130-140 million, this move aims to strengthen Akasa’s growth trajectory, even as the airline faces delays in Boeing 737 Max deliveries and growing competition from Ratan Tata’s Air India.

Premji Invest Steps In to Boost Akasa Air

Azim Premji's investment, alongside Ranjan Pai, brings fresh financial support to Akasa Air, helping it manage pre-delivery payments for new aircraft and expand its operations. This strategic boost could create new challenges for Air India, with Akasa leveraging niche services, competitive pricing, and on-time performance to capture market share.

Rakesh Jhunjhunwala Family Retains Majority Stake

The Jhunjhunwala family, heirs of late billionaire Rakesh Jhunjhunwala, have also participated in the funding round, ensuring they remain Akasa Air’s largest shareholders with a 38% stake. Despite a dilution in shares for founder CEO Vinay Dube and others, the Jhunjhunwala family retains a dominant position in the airline’s future.

Akasa’s Journey and Expansion Plans

Launched in August 2021, Akasa Air has rapidly built a fleet of 25 aircraft and placed orders for 226 Boeing 737 Max jets. However, growth has been hampered by production slowdowns and regulatory scrutiny, delaying the delivery of new planes. The airline operates on an asset-light model, selling aircraft to lessors and leasing them back to maintain cash flow.

Capital Infusion Amid Challenges

The funding, including over $100 million from Premji Invest and contributions from existing investors, comes at a critical time as Akasa Air navigates losses exceeding ₹2,300 crore in its first two years. The airline is now seeking regulatory approval from the Competition Commission of India (CCI) to finalize the deal.

Future Impact

Azim Premji’s strategic entry into Akasa Air could intensify competition in India’s aviation sector, challenging Air India’s dominance. With plans to expand its fleet and enhance services, Akasa is positioning itself as a formidable player in the post-Covid aviation boom.