Air India's incoming CEO Tewolde Gebremariam is considering folding budget carrier Air India Express into the parent airline group as part of efforts to reduce costs and streamline operations. According to Business Standard, citing people familiar with the matter, the proposal is still at an early stage but could eliminate the need to operate two airlines with separate operating permits. Gebremariam has questioned the rationale for maintaining separate management, engineering and administrative teams across the two carriers in multiple meetings across departments. A combination could lower regulatory requirements and reduce duplication across the group, with any merger requiring approval from Air India's supervisory board. Air India Express would keep its brand name in a combination, as reported by Business Standard.
Air India's financial performance deteriorated significantly in fiscal 2025-26, with consolidated losses widening to ₹22,238.23 crore from ₹10,858.83 crore in the previous year. According to regulatory filings, total income declined to ₹71,869.94 crore in 2025-26 from ₹78,635.61 crore in 2024-25. The consolidated expenses increased to ₹93,733.31 crore from ₹89,317.12 crore year-on-year, with higher repair costs and foreign exchange losses contributing to the deterioration. Foreign exchange losses rose dramatically to ₹7,388.23 crore in 2025-26 against ₹1,545.01 crore in the previous year, while aircraft repair and maintenance costs increased to ₹14,976.45 crore from ₹13,901.82 crore. Fuel expenses fell to ₹26,871.80 crore from ₹29,023.37 crore in the year-ago period, providing some relief to the airline's cost structure. The financial statements for the 2025-26 fiscal year were approved on June 1, 2026.
Air India's board of directors convened on Tuesday in Mumbai to discuss various matters as the airline prepares for a CEO transition. According to reports from PTI and Outlook Business, the board meeting was chaired by N Chandrasekaran, who serves as Chairman of Tata Sons. The incoming CEO, former Ethiopian Airlines Group chief Tewolde Gebremariam, is expected to formally take charge later this month. Campbell Wilson, the current MD and CEO, will be stepping down from his role this month after piloting an ambitious transformation plan since July 2022. The board meeting is expected to discuss various matters, including the salary structure and compensation package of the incoming CEO, as reported by PTI. Tewolde officially joined the company this month but still needs to be approved by local regulators as CEO because he's a foreign national. The deliberations show Tewolde's eagerness to weed out inefficiencies after Air India posted a loss of ₹220 billion rupees ($2.3 billion) in the year through March.
The loss-making Air India continues to face multiple operational and financial challenges, including the fatal AI171 crash in June last year that killed 260 people. According to PTI and Outlook Business, the airline has also grappled with geopolitical tensions, airspace closures, fuel price volatility and operational disruptions. In his earlier meetings, Tewolde raised concerns over Air India's low cargo load use, a sector that bolstered business at Ethiopian Airlines. He also urged staff to work on a plan to reduce maintenance issues. On September 7, incoming CEO Tewolde addressed airline staff during his first townhall meeting, stating "We will Make Air India Great Again (MAGA)" and emphasizing the need for operational excellence and minimizing disruptions. Chandrasekaran emphasized the importance of safety and building a stronger culture of cost consciousness at the airline. In his letter in the Tata Sons Annual Report for 2025-26, released in July, Chandrasekaran said Air India's transformation journey must be viewed as a five- to ten-year journey, considering years-long supply chain disruptions in key components, the need to overhaul legacy systems, culture and fleet, and the creation of a large cadre of airline professionals.
The airline has adequate insurance coverage for the fatal AI171 crash incident. According to regulatory filings, the parent company is adequately covered under its aviation hull and liability insurance policies. The filings stated that the parent company has received the agreed amount from the insurer towards loss of aircraft and related incidental costs under its hull insurance. Exceptional items stood at ₹429.05 crore in 2025-26, including an amount related to the fatal AI171 plane crash. Based on available information, management believes that any financial liability arising from such claims is expected to be substantially covered by the parent company insurance policies, with no material financial impact on the company's reserves and losses presently expected. The filing added that "Accordingly, no material financial impact on the company's reserves and losses is presently expected".
Tata Group took control of Air India from the Indian government in January 2022, and later Singapore Airlines subsequently acquired a 25.1 per cent stake in the merged Air India Group. As reported by PTI and Outlook Business, the leadership transition comes as Air India seeks to strengthen its operations and improve financial performance. The new executive streamlining Air India would be welcome news for Tata Group and its equity partner Singapore Airlines Ltd., which is facing political backlash for backstopping Air India's loss-making operations. Air India is not new to mergers, having gone through one with Indian Airlines in 2007 and then undergoing portfolio changes after the Tata Group bought the airline in 2022, with four brands combining into two, resulting in the current structure of Air India and Air India Express. Air India's loss stood at more than SGD 3.56 billion, or over ₹26,700 crore, in the financial year ended March 2026, as the carrier dealt with the impact of airspace curbs and other headwinds. Tewolde was chosen largely due to his track record of turning the Ethiopian Airlines Group into Africa's largest and most profitable carriers.
