Air India to Implement Cost-Cutting Measures Amid Escalating Conflict

Air India Seeks to Cut Costs Amidst Turbulent Aviation Industry

Air India Ltd. is taking steps to reduce costs and decrease flights in response to the ongoing Iran war, a move that comes as the airline searches for a new leader to navigate a challenging period. According to people familiar with the matter, the airline is discussing measures to cut costs, including furloughing non-technical employees and reducing flight capacity by over 20% for the next three months, unless the situation improves.

Cost-Cutting Measures to be Announced Soon

The airline's board of directors discussed these measures in a meeting on Thursday, and the cost-cutting plans are likely to be announced shortly. The proposed measures also include paying lower bonuses to all employees and implementing pay cuts for those at the vice president level and above. Air India, India's second-largest airline, is struggling to recover from a record loss of more than Rs 220 billion ($2.3 billion) in the financial year that ended on March 31.

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Impact of the Iran War on the Aviation Industry

The Iran war has had a significant impact on the aviation industry worldwide, and Air India is no exception. The airline's existing struggles, including a fatal crash and airspace closures due to the border flare-up with Pakistan last year, have been compounded by the war. Singapore Airlines Ltd., which owns 25.1% of Air India, has seen its earnings dragged down by the airline's losses and has deepened its operational involvement at the carrier.

Leadership Change and Industry Trends

The leadership change at Air India comes as the airline searches for a new chief executive officer to replace Campbell Wilson, who resigned in April. In contrast, India's largest carrier, IndiGo, appointed aviation veteran Willie Walsh as its new CEO at the end of March to steer it through a particularly tough time for the country's airlines.

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Note: The table only compares the record loss of Air India to provide context on the airline's financial struggles. The record loss of Singapore Airlines Ltd. is not provided in the original text.