Financial crisis: Air India considers unpaid leave for staff amid rising operational costs

New Delhi: The Tata Group-backed Air India board has discussed a series of cost-cutting measures, including possible furloughs and deferment of performance-linked bonuses, as the airline faces mounting losses and operational pressure linked to the ongoing West Asia conflict, according to multiple reports.

The meeting, held at the airline’s headquarters in Gurugram, lasted more than three hours. Discussions focused on Air India’s financial position, cost rationalisation plans and wider operational challenges. 

The airline is evaluating several austerity measures to control expenses as rising jet fuel prices and airspace restrictions connected to geopolitical tensions in West Asia continue to affect operations.

Among the measures discussed were temporary unpaid leave for employees and delays in bonus payouts that form part of employees’ cost-to-company structure.

Air India has seen a sharp rise in operating expenses in recent months because of longer flight routes and higher fuel costs resulting from the regional conflict.

Board reviews financial performance and CEO transition plans

The board also reviewed the airline’s financial performance for 2025-26 and discussed leadership transition plans, including the selection of a new Chief Executive Officer.

Air India CEO and Managing Director Campbell Wilson is set to step down later this year and is scheduled to address employees at a townhall meeting on Friday.

Air India Group is estimated to have posted losses exceeding Rs 22,000 crore in the financial year ending March 2026.

West Asia tensions continue to affect aviation sector

In April, Air India Express announced the restoration of flight operations to Qatar and Bahrain, while also expanding its network across major Gulf destinations, including the UAE, Oman and Saudi Arabia, effective April 30, 2026.

The continuing geopolitical tensions in West Asia have affected the wider aviation sector, disrupting flight schedules and increasing operational costs for airlines globally.

Media reports said Dubai International Airport recorded a sharp decline in passenger traffic in March, with volumes falling significantly amid disruptions linked to the regional conflict.