Air India tightens spending controls as it battles losses and high fuel costs: Report

Air India has set up a dedicated team to identify cost savings across operations and tightened spending approvals as the airline grapples with airspace disruptions, the Middle East conflict and high jet fuel costs, CEO Tewolde Gebremariam told employees in an internal memo.

The carrier faces mounting pressure to restore profitability and rebuild confidence in its safety standards after recording a loss of more than $2 billion in the fiscal year ended March and coming under regulatory scrutiny following a fatal crash in June 2025 that killed 260 people.

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In August, two people familiar with the matter told Reuters that Air India was seeking about $1.5 billion in fresh equity from its owners Tata Sons and Singapore Airlines.

The airline has also faced safety and compliance lapses, including operating aircraft without valid certifications, while Pakistan's airspace ban and conflict-related disruptions in the Middle East have forced longer routes, cancellations and cuts to international services.

Air India's efforts to modernise an ageing fleet have been hampered by shortages of seats and other components, delaying cabin upgrades, while it is seeking to defer deliveries of hundreds of aircraft on order to curb costs.

The challenges confront new CEO Tewolde Gebremariam as he tries to turn around the airline, which has not reported a profit since returning to private ownership in 2022.

Also Read: Air India's consolidated loss widens to Rs 22,238 crore in FY26

In the memo, Tewolde said Air India had set up a dedicated cross-functional team to identify cost-saving opportunities across the organisation.

He also announced an employee initiative to reward ideas that cut costs or boost revenue, urging staff to embed frugality and accountability into everyday decisions.