Air India has assured its more than 24,000 employees that layoffs are off the table, even as the Tata-backed carrier delays annual pay increases by at least a quarter and tightens spending. The airline has been hit by the closure of Pakistani airspace, disruptions due to the war in West Asia and rising jet fuel prices.
“We are not anticipating layoffs,” Chief Human Resources Officer (CHRO) Ravindra Kumar GP said when he addressed employees at City Hall on Friday, two people present said. Mint.
The second largest airline in the country is battling a host of issues including mounting losses, geopolitical headwinds, macro-economic factors such as the depreciation of the rupee against the dollar, which are impacting costs, and a leadership transition.
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The CHRO added that the airline would defer annual increments by at least one quarter in view of the uncertain economic environment and continue with variable salaries for the last financial year. It will also continue with planned promotions.
CEO Campbell Wilson, also present at the town hall, reiterated the need to cut costs. “During these difficult times, we must focus relentlessly on our costs,” Wilson told employees. He urged staff to freeze discretionary spending, renegotiate rates where possible and postpone non-critical spending.
The Tata Group-backed airline’s losses reportedly exceeded ₹10,000 crore reported in FY25. Privately held Air India is yet to announce its FY26 numbers.
The employee town hall was held a day after Air India’s board met to discuss finances for the fiscal year ending 2026. Almost a month ago, on April 8, Tata Sons chairman Natarajan Chandrasekaran told Air India employees to focus on execution amid industry-wide problems.
Air India did not respond Mint questions about meetings at the town hall.
Key things
- Air India rules out layoffs but delays annual increments by a quarter.
- CEO Wilson resigned; no successor was appointed at the critical moment.
- International jet fuel doubled in April, squeezing already loss-making routes.
- International operations were reduced by July as diverted flights became unprofitable.
- Analysts say management sees the current pain as temporary, not a structural disruption.
Reducing expenses
Chandrasekaran’s town hall came amid reports of mounting losses and a change in leadership at the airline. Outgoing CEO Wilson resigned on March 30 and is currently on notice. There is still no word on his successor.
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Reassuring employees about job security is important. Chairman Chandrasekaran said, “We need to focus on what is under our control, sharpen our cost discipline and remain realistic about the situation”. This raised concerns about possible cost-cutting measures the airline would take.
Commenting on the airline’s financial performance, CFO Sanjay Sharma said revenue softened in FY26 due to heightened external uncertainties. In contrast, FY25 saw strong revenue growth and fleet expansion, driving financial momentum.
“Air India’s best position appears to signal that FY27 will be a year of tighter financial controls in an environment marked by volatile fuel prices, higher operating costs from diverted international flights and lower discretionary consumer spending. Like other airlines around the world, Air India is rebalancing growth ambitions with profitability goals,” said Gagan Dixit, senior vice president of Gas and Aviation Aviation.
In addition to streamlining the network, it seeks to reduce discretionary spending and improve operational efficiency. This suggests that management views the current turbulence as cyclical rather than structural, he added.
“The deferral of additions also suggests that airline executives expect external pressures to persist for at least some time to come,” Dixit said.
The absence of layoffs and the continuation of variable wages are important internal signals. They suggest the airline still expects medium-term demand growth and wants to maintain employee morale during a period of operational transformation and market uncertainty, he added.
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Terminating flight routes
Route cuts will continue as the airline plans to streamline operations while operating costs rise.
Air India has already scaled back some international flights in April and May, with the cuts extending into July after skyrocketing jet fuel prices, longer flight routes due to airspace closures and operational disruptions made several international flights unprofitable, Wilson said in an earlier internal memo.
“To partly compensate for the huge increase in costs, we have raised ticket prices and imposed fuel surcharges, but these higher ticket prices understandably affect customer demand, so we can only raise prices so far before people decide to stay at home,” he said afterwards.
The aviation sector has also seen a slowdown in domestic air traffic growth since covid. Growth in domestic air traffic slowed to 1.3% to 167.46 million in FY26, a sharp decline from more than 7% growth in FY25, according to data from the Aviation Safety Authority, Directorate General of Civil Aviation.
Aviation fuel, a key component of airlines’ operating costs that typically accounts for 35-40%, remains highly volatile, adding pressure to international operations already affected by geopolitical disruptions and longer flight times.
While the civil aviation ministry capped domestic jet fuel price hikes at 25% in April and kept prices unchanged in May, the relief does not apply to international flights, where fuel prices doubled in April and rose another 5% in May.
Air India, which is owned by Tata Sons with a 73.82% stake and Singapore Airlines Ltd (SIA) with 25.1%, has also sought additional funding from its shareholders, although the allocated amount could not be independently ascertained. Mint.
