Air India Sets up Cost-Cutting Team After Posting US$2.3 Billion Loss

Air India has set up a cross-functional team to find operational savings after posting a US$2.3 billion loss for the fiscal year ended March. It is tightening spending approval limits immediately to stem cash burn.

Chief executive Tewolde Gebremariam told staff in an internal memo that the airline must embed frugality and accountability into daily decisions. Management is introducing an incentive programme for employees. It will reward staff who submit workable ideas to cut expenses or lift revenue.

Spending Controls and Capital Demands

The belt-tightening follows an August request by Air India to raise approximately US$1.5 billion in fresh equity from owners Tata Sons and Singapore Airlines. Singapore Airlines holds a 25.1 per cent stake following their joint venture consolidation.

Air India has failed to record an annual profit since returning to private ownership under Tata Group in 2022. Rising jet fuel prices and prolonged route diversions have burned cash faster than projected during the initial privatization plan.

Route Headwinds and Supply Bottlenecks

Geopolitical turbulence has added direct costs to international flight schedules. Airspace closures over Pakistan and conflict disruptions across the Middle East have forced longer routings, cancellations, and capacity cuts on key long-haul services.

Fleet renewal plans also face delays. Shortages of aircraft seats and cabin components have stalled retrofits on older jets. Management has opened talks to defer deliveries of hundreds of newly ordered aircraft to conserve capital.

Operational Scrutiny and Safety Lapses

Regulatory pressure has mounted alongside the cost drive following serious operational failures. The airline faced intense scrutiny after a June 2025 crash in Ahmedabad killed 260 people, severely damaging consumer confidence.

Aviation authorities have cited the carrier for multiple compliance lapses, including flying aircraft without valid maintenance certifications. Regulators also launched investigations after a pilot involved in a severe mid-air plunge in August tested positive for marijuana.

Turnaround Strategy Under New Leadership

Gebremariam took charge of the airline on August 5, replacing former Singapore Airlines executive Campbell Wilson, who had led the restructuring effort since 2022. Gebremariam previously ran Ethiopian Airlines, where he built a reputation for lean cost management and rapid commercial expansion.

Talks are now underway with aircraft manufacturers to negotiate revised delivery schedules. Meanwhile, Tata Sons and Singapore Airlines are working to finalize terms on the requested US$1.5 billion capital injection.