Boeing is close to winning an order for around 70 to 100 of its 737 MAX planes from Indian billionaire Rakesh Jhunjhunwala’s low-cost startup airline Akasa, pending separate talks on a long-term engine service deal, according to a Reuters report.
Jhunjhunwala's plan to launch an ultra-low-cost airline, could give planemaker Boeing a chance to recover some lost ground in India as arch rival Airbus has forged ahead in the country.
While Jhunjhunwala's plan to launch Akasa Air comes at a time when airlines are piling up losses due to the crippling effect of the coronavirus pandemic, it is the aviation sector's long-term prospect that he appears to be focused on. He will also be looking at sourcing planes at a low price due to the recession in the industry.
Jhunjhunwala is referred to as the “Warren Buffet of India” because of his successful stock market investments and is valued at $4.6 billion by Forbes.
For Boeing this comes as a big opportunity to gain market share as it does not have any other major operator for its narrowbody 737 aircraft in India apart from SpiceJet.
The Akasa deal could turn out to be one of the biggest deals of the year outside the United States to acquire purchased or leased 737s, according to market analysts.
Details of the Akasa venture have not been fully disclosed, but Jhunjhunwala told Bloomberg he plans to have a 40% stake in the low-cost airline, which will have 70 aircraft of up to 180 seats within four years.
Akasa's other co-founders are Aditya Ghosh, who has worked with IndiGo and played a key role in the airline’s early success, and Vinay Dube, a former CEO of Jet who has also worked with Delta.
Indian commercial airlines are dominated by low-cost carriers (LCCs) including IndiGo, SpiceJet, GoFirst and AirAsia India, with the majority of them operating a fleet of Airbus's narrowbody planes.
These airlines also have over 900 planes on order of which 710 are Airbus while only 185 are Boeing 737 aircraft.