Air India Eyes Cuts Amid Iran War Fallout

Air India is contemplating drastic cost-saving initiatives, such as furloughing non-technical employees and slashing flight capacity by over 20% for the upcoming three months. These measures are being explored as the airline faces increased financial pressure stemming from the Iran war, which has destabilized global aviation markets. The board has also discussed reduced bonuses and potential pay cuts for senior management.

The carrier's financial distress is highlighted by a record loss of more than 220 billion rupees in the last fiscal year. Compounding these issues are soaring jet fuel prices, which are up 63% for international routes and nearly 15% for domestic flights compared to pre-conflict levels. This surge in fuel costs, a major operational expense, significantly impacts profitability.

Furthermore, Indian airlines are rerouting flights to Europe and the US due to airspace closures over Iran and Pakistan, leading to longer flight times and increased operational costs. This situation, coupled with a weakening rupee, has led to higher fares and depressed demand. Advance bookings for the summer travel season are reportedly lower than anticipated, reflecting traveler uncertainty and elevated prices.