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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."

(Reporting by Aditya Kalra and Abhijith Ganapavaram; Editing by Jamie Freed)