Air India board discusses unpaid leave, bonus delays as losses mount: Report

Tata Group-owned Air India’s board on Thursday discussed various cost-saving measures, including possible furloughs, as the loss-making carrier grapples with mounting financial pressure amid the West Asia conflict, reported PTI, citing sources.

The board meeting, chaired by Tata Sons Chairman N Chandrasekaran, was held at the airline’s headquarters in Gurugram, Haryana, and lasted for more than three hours.

Cost-cutting measures reportedly figured prominently in the discussions as the airline faces sharply higher operational expenses due to airspace restrictions and rising aviation turbine fuel (ATF) prices triggered by the conflict in West Asia.

The measures could include furloughs and deferred payment of bonuses, the report said.

Bonuses at Air India are performance-linked and form part of employees’ cost-to-company (CTC).

Furlough generally refers to unpaid leave imposed during periods of financial stress.

Air India Chief Executive Officer and Managing Director Campbell Wilson is also scheduled to address a townhall on Friday.

Wilson, a Singapore Airlines veteran, will step down later this year.

Air India Group, comprising Air India and Air India Express, is estimated to have incurred losses exceeding ₹22,000 crore in the financial year ended March 2026, according to PTI report.

The airline has been hit hard by prolonged airspace restrictions following the West Asia conflict, forcing it to take longer routes on several international sectors, resulting in higher fuel burn and increased operating costs.

On May 1, Wilson had written to employees saying the situation remained “extremely challenging”.

“… massive rise in jet fuel prices which, together with airspace closures and longer flying routes, has caused many of our international flights to become unprofitable to operate,” he had said.

The airline has already reduced international operations in April and May and may further trim schedules in June and July, he had said.

“We very much regret the disruption to our customers’ plans and our crew’s rosters, and hope that the Middle East situation settles — and the Strait of Hormuz opens — soon so that we can get back to a more normal state,” Wilson said in the message.

He also noted that while domestic operations were less severely impacted due to the government capping domestic fuel price increases at 25%, profitability on domestic routes too had been significantly affected.

“To partially compensate for the huge spike in costs, we have increased airfares and imposed fuel surcharges but, understandably, these higher airfares impact customer demand,” he said.

The board of Air India includes Singapore Airlines CEO Goh Choon Phong and independent directors Sanjiv Mehta, Alice Vaidyan, P R Ramesh and P B Balaji.

The carrier is also scouting for a new CEO, with names of Air India and Singapore Airlines executives as well as some European candidates doing the rounds.

The financial strain on airlines comes amid soaring ATF prices.

On April 26, Air India, IndiGo and SpiceJet had jointly approached the government, warning that the aviation industry was under extreme stress, as they sought relief measures.

Against this backdrop, the Union Cabinet on Tuesday approved the Emergency Credit Line Guarantee Scheme (ECLGS 5.0), under which airlines can avail credit support of up to ₹1,500 crore per borrower.

According to SBI Research, the aviation sector is likely to be among the biggest beneficiaries of the package as airlines battle elevated fuel costs and weaker passenger demand arising from the geopolitical crisis.

Outstanding bank credit to the aviation sector stood at ₹52,600 crore as of March 2026, up 14% year-on-year, the report noted.

At full disbursement, the proposed ₹5,000 crore support package would amount to about 9.5% of total outstanding aviation credit.