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India's newest airline faces crises amid Boeing ( BA ) challenges

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Hundreds of Akasa pilots cannot fly as deliveries delayed

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Airline's top executives reveal Boeing ( BA ) stress in

closed-door

meeting

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Akasa says it is 'fully aligned' with US planemaker

By Aditya Kalra and Abhijith Ganapavaram

NEW DELHI, March 20 (Reuters) - Frustration is building

inside India's newest airline, Akasa Air, with top executives

privately criticising Boeing ( BA ) for delayed plane deliveries

and scrambling to assuage hundreds of anxious pilots who remain

idle without work.

Troubles at Akasa, backed by an Indian billionaire's family,

are among the starkest examples of how Boeing's ( BA ) woes are

crippling airlines globally and having a ripple effect on their

planned expansions.

The Mumbai-based low-cost airline, which started operations

about three years ago, has a fleet of 27 planes, but has 226

jets - all Boeing 737 MAXs - on order. Deliveries have been

delayed as Boeing's ( BA ) 737 programme faced regulatory scrutiny

after a mid-air cabin panel blowout last year and suffered from

the effects of a seven-week workers' strike.

Just as Akasa has expressed confidence in Boeing ( BA ) publicly,

its executives voiced optimism about U.S. planemaker's

turnaround in a private February town hall with pilots, but top

executives did not shy away from candidly revealing the

operational stress they face, according to an audio recording

reviewed by Reuters.

During the previously unreported meeting, Akasa's chief of

strategic acquisitions, Priya Mehra, described Boeing ( BA ) as the

"elephant in the room" whose workers' strike caused "sleepless

nights". Co-founder Aditya Ghosh referred to the company as

"Boeing ( BA ) bloody ... retarding our speed".

"We just don't have enough aircraft to fly ... nobody wants

to sit at home and twiddle their thumbs," CEO Vinay Dube told

the gathering of pilots.

Akasa did not comment on queries about the remarks made in

the town hall, but said it is in "continuous discussions with

Boeing ( BA )" and is "fully aligned with the steps they are taking to

enhance quality and streamline resources."

Boeing's ( BA ) woes have hit airlines globally. U.S. budget

carrier Southwest Airlines ( LUV ), which operates an all-Boeing ( BA )

fleet, had to lay off workers company-wide for the first time in

its history, in part due to delivery delays.

However, most airline executives have avoided direct public

criticism of Boeing ( BA ) since a closed-door revolt by major U.S.

carriers led to the resignation of CEO David Calhoun last year.

Campbell Wilson, the CEO of Akasa's larger rival Air India,

which ordered 220 Boeing ( BA ) planes in 2023, this week said global

aircraft shortage will persist for four to five years and "we

are victims of circumstance."

But as a far smaller player, the stakes are higher for

Akasa, a loss-making carrier on an expansion spree in the

world's fastest-growing aviation market.

Compared to Air India and market leader IndiGo's

combined 90%-plus market dominance, Akasa, the country's

third-largest airline, has just a 4.7% domestic market share.

Akasa's revenue quadrupled to $356 million last year, but

its loss widened to $194 million from $86 million.

In a sign of tension between the airline and the planemaker,

Mehra informed pilots during the town hall that Akasa CEO Dube

had told Boeing ( BA ) to stop holding "big events and parties" and

"focus on the production."

It was unclear which events Dube was referring to.

Boeing ( BA ) did not have an official presence at China's biggest

air show in November after its management ordered reduced

participation in industry events when the strike began in

September, though it attended the Aero India show last month.

Boeing ( BA ) did not respond to Reuters' queries.

Akasa's co-founder Ghosh, previously IndiGo's president,

told the town hall that it would take 16 to 20 months to double

its fleet size.

That would mean Akasa will have roughly 54 planes by October

2026, though the airline had earlier estimated it would have 72

by March 2027.

PILOTS NOT FLYING

Akasa, started with the backing of late Rakesh Jhunjhunwala,

dubbed India's Warren Buffett, went on a hiring spree and

launched international routes to Qatar and Saudi Arabia within

two years of its launch.

Despite challenges, Akasa in February raised an undisclosed

amount of new capital from Indian billionaire tycoon Azim

Premji's investment arm and Jhunjhunwala's family.

Of its 775 pilots hired for flying, 60%, or 465, "are able

to log flying hours", Akasa said. That means 310 pilots are

currently grounded due to the lack of planes.

Akasa said "most of the remaining 300 pilots will also be

able to fly by 2025-end", without explaining how.

Three pilots said on condition of anonymity there was

widespread frustration among those who joined the company months

ago and still are not flying.

"I am making peanuts sitting at home," said one pilot who

cannot clock incentives and has lost out on career progression,

both of which come with flying hours.

Quitting would also force repayment of training bond of

$41,700. Pilots earn basic annual pay of $35,000 to $111,000,

depending on rank, for flying 40 hours a month.

Employee costs at Akasa more than tripled to $90 million

last year.

"Akasa should take a hard look at (pilot) numbers and if

necessary, they should trim the number," said Harsh Vardhan,

chairman of Starair Consulting.

In December, Akasa sent an email to pilots, seen by Reuters,

which said those waiting for their training had a "unique

opportunity" to diversify their skills into "information

technology" and "maintenance and engineering". But in return,

they would receive no more pay than they get sitting at home.

"This initiative is not a stop-gap arrangement but rather a

strategic effort to offer broader career development," Akasa

told Reuters.

"There is no other airline in India or the world that can

offer better career advancement opportunities to their pilots."