Ace Investor Jhunjhunwala May Start Airline With Aviation Professionals

Jhunjhunwala - aviatorsbuzz

Business magnate and stock broker Rakesh Jhunjhunwala is reportedly exploring a plan to back a new, low-fare airline venture pursued by a team of senior aviation professionals.

According to a special report in The Economic Times, Mr. Jhunjhunwala has already had preliminary talks for an investment of up to $35 million (Rs 260.7 crore) in the new airline.

Former Jet CEO Backed

The publication citing sources in the aviation industry mentioned in the report that a team led by former Jet Airways CEO Vinay Dube has held an initial round of discussions with Jhunjhunwala and a foreign investor.

The airline, tentatively named Akasa — meaning, the sky — applied for the aviation ministry’s no-objection certificate earlier this year, the news report said. If the proposed investment fructifies, it would give Mr. Jhunjhunwala around 40% equity holding in the new company.

Other members of the team of professionals include Praveen Iyer, former vice president at Jet and ex-chief commercial officer at GoAir, and Anand Srinivasan, former head of revenue management at GoAir.

Mr. Jhunjhunwala, is said to have a Midas touch, and is often referred to as India’s own Warren Buffet. He is a trader and also a chartered accountant.
According to Forbes’ Rich List, he is the 48th richest man in the country. Mr. Jhunjhunwala is the chairman of Hungama Media and Aptech and sits on the board of directors of firms such as – Viceroy Hotels, Concord Biotech, Provogue India and Geojit Financial Services.

“The aviation ministry’s NOC is just the first approval. For further applications, the team needs to draw up a firm business plan for which it needs funds. Everything depends on when and how much money they can raise. The aim is to start the airline by the middle of next year,” the financial daily quoted an industry source as saying.

Jhunjhunwala Optimistic

Worth mentioning here is that Mr. Jhunjhunwala has been investing in the aviation sector for quite a long time. He owned slightly more than 1% of SpiceJet at a time when the airline was being turned around by its current owner Ajay Singh, leading to an upward surge in its stock price. He also owned close to 1% of Jet Airways, which shut down in 2019 due to cash and debt troubles.

The ace investor who has often taken big bets on local entrepreneurs, is mulling the proposal at a time India’s aviation industry is going through its one of its worst phases in recorded history.

Like its global peers, the businesses of Indian carriers have been battered by the COVID-19 pandemic. All of them have suffered record losses, had to cut large swathes of their flight operations, lay off staff and slash salaries.

Some like SpiceJet have allegedly defaulted on payments to aircraft leasing companies.

Mr. Jhunjhunwala in an interview with CNBC-TV18 said that he does not think there will be a third wave of COVID-19.

“Nobody predicted the second wave and now everyone is talking about the third wave. With vaccination exercise picking pace and immunity growing, I don’t think there is going to be the third wave. Plus, the economy is better-prepared now,” he said.

Mr. Jhunjhunwala added that investors should not be fearful of the market as a whole merely because of small corrections. “Comparing the ongoing and the 2004-2008 bull market,” Mr. Jhunjhunwala said he has a feeling that the current rally will last for decades.

Jhunjhunwala Board Slot Airways - Jet Airways - Aviatorsbuzz
A file photo of a Jet Airways aircraft and crew. Rakesh Jhunjhunwala had a 1% stake in the company earlier. Source: NDTV

First Profit in 1986

He earned his first big profit in 1986 when he bought 5,000 shares of Tata Tea at Rs 43 and the stock rose to Rs 143 within three months. He earned over three-times profit. In three years he earned 20-25 lakh.

Over the years, Jhunjhunwala successfully invested in Titan, CRISIL, Sesa Goa, Praj Industries, Aurobindo Pharma and NCC.

After the 2008 global recession, his stock prices fell by 30% but he eventually recovered from the loss by 2012.

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