Air India is considering major cost-cutting measures, including reducing flight capacity and furloughing staff, as the Iran war adds to the airline’s mounting financial troubles, according to people familiar with the matter.
At a board meeting held on Thursday, the airline discussed cutting flight capacity by more than 20 per cent for the next three months unless conditions improve. The board also considered furloughing nontechnical employees, lowering bonuses across the company, and reducing salaries for employees at the vice president level and above.
The measures are expected to be announced soon.
The Tata Group-owned airline has been struggling with losses and operational disruptions even before the Iran conflict. The war has intensified pressure on the global aviation sector and added to Air India’s existing challenges, including the impact of a fatal crash and airspace closures linked to tensions with Pakistan last year.
Air India ended the financial year on March 31 with a record loss of more than 220 billion rupees.
Singapore Airlines, which holds a 25.1 per cent stake in Air India, has also been affected by the carrier’s losses and is reportedly increasing its operational involvement in the airline.
The latest developments come during a leadership transition at Air India. Former chief executive officer Campbell Wilson resigned in April, and the airline is currently searching for a replacement.
India’s largest airline, IndiGo, appointed aviation industry veteran Willie Walsh as its new CEO in March as Indian carriers navigate a difficult operating environment.