Air India's A350 engines turning costly? CEO Tewolde Gebremariam looks to reduce soaring maintenance costs
Air India CEO Tewolde Gebremariam, who took charge of the loss-making carrier last month, is looking to bring down the airline's expenditure on maintaining its A350 aircraft as part of a broader cost-cutting exercise, reported Bloomberg citing people familiar with the matter said.
The airline currently operates six Airbus A350-900 planes, fitted with Trent XWB engines manufactured by Rolls-Royce Holdings Plc, on key routes connecting India with the US and Europe.
In 2023, Air India had placed an order for 80 Trent XWB engines, with an option to purchase 20 additional units.
Tewolde flagged the expenses involved in operating and servicing the engines, which have turned out to be higher than initially estimated, according to the report citing people familiar with the matter. They said the airline has begun preliminary talks with its service providers to explore ways to bring down the costs. Air India has arrangements with Airbus Flight Hour Services for aircraft maintenance and Rolls-Royce's TotalCare programme for engine servicing.
The actual maintenance expenditure has exceeded the projections made when the agreements were originally signed, prompting the airline to raise the issue with the companies, they added.
The cost-reduction drive is part of Tewolde's efforts to improve the financial performance of Air India, which he joined last month after previously heading Ethiopian Airlines Group.
The airline recorded its highest-ever annual loss of more than 220 billion rupees ($2.3 billion) in the previous financial year. It is also looking to secure 100 billion rupees in fresh capital from its shareholders, Tata Sons Pvt. and Singapore Airlines Ltd., amid scrutiny over the additional financial support required by the carrier.
Meanwhile, Air India, Airbus and Rolls-Royce did not respond to Bloomberg's emailed requests for comment.
Tewolde is also looking to improve the utilisation of Air India's cargo operations, which currently operate at an average of only 35% of their capacity, according to the report citing sources who spoke earlier in September.
He has asked employees to work on measures to address maintenance-related problems, pointing out that the airline's fleet is relatively young. Last year, India's aviation regulator had flagged a higher number of safety-related issues at Air India compared with other carriers.
The CEO is also exploring the possibility of bringing budget airline Air India Express under the main Air India group.
Also Read | New Air India CEO gets his strategy in place
Cutting losses has emerged as a key priority for Tata Sons, Air India's majority shareholder. The conglomerate is facing an internal power struggle over Chairman Natarajan Chandrasekaran's tenure, alongside regulatory pressure to list the holding company.
Tata Sons, which controls businesses spanning sectors from coffee to automobiles, has asked Air India to rein in its expansion plans and focus on consolidating its existing operations.
Garvit Bhirani is a journalist based in Gurugram. He is a Deputy Chief Content Producer at LiveMint, where he covers national and international news stories, focusing on accuracy and compelling storytelling for readers. <br><br> With a total of six years of experience in journalism, he has previously worked with Vaco Binary Semantics for Google, taking on the role of news curation lead, and reported from the field on health, education, and agriculture stories for 101reporters and News9. He has also served as a content editor for entertainment and news media organisations. <br><br> Garvit holds bachelor’s and master’s degrees in journalism and mass communication from Guru Gobind Singh Indraprastha University and Gurugram University, respectively. During college days, he joined India’s only non-profit student journalism network, where he anchored daily news updates and produced his own weekly show called ‘Data Fix’. <br><br> He was selected for the YES Foundation Media for Social Change Fellowship in Delhi, the Talking Data to the Fourth Pillar residential workshop, and the VOICE Fellowship in Pune. <br><br> He holds certificates in COVID-19-verification reporting, data journalism, food & agriculture, tech policy, media literacy and countering misinformation, and tackling election disinformation courses from Thomson Foundation, IndiaSpend, The Dialogue, US Mission in India, and AFP. <br><br> He can be reached on <a href="https://www.linkedin.com/in/garvit-bhirani">LinkedIn</a> or on <a href="https://x.com/GarvitBhirani">@garvitbhirani</a> on X
Get Latest real-time updates
Catch all the Business News , Corporate news , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More
✕
Wait for it…
Oops! Looks like you have exceeded the limit to bookmark the image. Remove some to bookmark this image.