Akasa Air Eyes $300 Million Debt Financing to Fuel Expansion

India’s burgeoning airline, Akasa Air, is setting its sights on securing around USD 300 million through structured credit, as per reports by MoneyControl. The Mumbai International-based carrier, which took to the skies in August 2022, has engaged the financial services firm UBS to facilitate this significant fundraising initiative aimed at bolstering its operational and fleet expansion.

With a current network connecting 17 cities across India and a growing fleet that includes twenty-one B737-8s alongside a single B737-8-200, Akasa Air is aggressively expanding its footprint in the competitive Indian aviation market. The airline has placed substantial orders with Boeing, tallying up to 103 B737-8-200s, four B737-8s, and ninety-nine B737-10s, signaling its long-term commitment to growth and operational scalability.

Despite a reported loss of INR 6.03 billion (approximately USD 76.2 million) for the fiscal year ending March 31, 2023, Akasa’s strategic moves indicate a robust outlook on capturing market share and enhancing its service offerings. Earlier in 2023, there were indications that the airline sought to raise between USD 75 and 100 million for aircraft acquisitions, with subsequent reports in September suggesting a potential equity raise up to USD 400 million. However, the current strategy has pivoted towards debt financing, allowing the airline to preserve equity stakes while securing the necessary capital for expansion.

The Jhunjhunwala family, holding a significant 45.97% stake in Akasa Air, along with other key shareholders including CEO Vinay Dube with 16.13%, Madhav Bhatkuly with 9.41%, and the Dube family members Sanjay and Niraj with 7.59% each, have been instrumental in the airline’s launch and initial funding phase. The move to opt for debt over equity financing is poised to maintain the existing shareholder structure intact while providing the airline with the financial leverage needed to sustain its growth trajectory and compete effectively in India’s dynamic aviation sector.