Air India CEO Eyes Merger to Slash Costs

Air India's incoming Chief Executive Officer, Tewolde Gebremariam, is actively exploring the integration of its low-cost carrier, Air India Express, into the main airline group. This initiative is part of a broader strategy to cut operational costs and combat substantial financial losses. Gebremariam has reportedly questioned the necessity of maintaining separate operating permits for both entities.

The proposed merger seeks to consolidate management, reduce administrative staff, and ease regulatory burdens. While still in its preliminary stages, the plan requires approval from Air India's supervisory board. Air India Express is expected to retain its brand identity post-merger.

This move by Gebremariam, known for his success at Ethiopian Airlines, underscores the urgency to address Air India's financial challenges. The airline incurred a loss of Rs 22,000 crore in the fiscal year ending March. Additional hurdles include navigating Pakistani airspace closures and volatile fuel costs due to Middle Eastern conflicts.

Air India has prior experience with mergers, notably the integration with Indian Airlines in 2007. Following its acquisition by the Tata Group in 2022, the airline underwent portfolio adjustments, leading to its current structure comprising Air India and Air India Express.