Air India is set to offer its employees performance-linked stock options in a bid to reward and attract talent, as the airline pursues profitability four years after its takeover by the Tata Group.
Eligible employees, including pilots, engineers and senior management, will have the right to buy shares later, once they have been granted stock options, at a price between the face value of ₹4 a share and the fair market value on the grant date, said a company executive privy to the matter.
The plan was cleared at an extraordinary general meeting held on 13 February. “The objective of PSOP (performance stock option plan) 2026 is to reward the eligible employees of Air India and its subsidiaries, present or future, for their performance and to motivate them to contribute to the growth and profitability of the company,” said the resolution at the meeting. “The plan aims to attract, retain and reward talent in the organisation”
About 227.1 million stock options, or 0.25% of Air India’s total share capital, would be issued as new shares to eligible employees, per a company disclosure to the corporate affairs ministry on 6 April, 2026.
Significantly, Air India, in which Tata owns 73.82%, has also granted pre-emptive rights to Singapore Airlines Ltd (SIA), giving it the right to buy additional shares to maintain its current 25.10% stake in it.
The vesting cliff, or the waiting period before an employee receives the shares, is one to five years, implying Air India is seeking continued service from its employees.
The nomination and remuneration committee of the seven-member board of Air India will decide on the eligible employees, the number of shares and the price, the company’s resolution said.
An email sent to Air India and Singapore Airlines seeking comment on the development went unanswered.
“Today, it’s a very, very common ask from senior-level CXOs and employees to expect Esops or some sort of equity in the company and this trend is no longer limited to startups,” said Rohit Jain, managing partner at law firm Singhania & Co. “While such moves may still be relatively new for legacy companies like Air India, going forward, I would expect more and more companies to adopt this practice.”
India’s two listed airlines, IndiGo and SpiceJet, have already announced Esop schemes. Privately-held Akasa Air also has such a scheme in place.
To be sure, Air India had offered nearly 8,000 employees shares as part of the sale agreement when it bought the airline from the government in January 2022. The then Employee’s Share Benefit Scheme, under which nearly 1.08% of equity was managed by SBICAP Trustee Co Ltd, was given to employees based on their years of service pre-Tata takeover.
In this new performance-linked share offering, Air India employees could expect to get only half of the shares if the airline performs below 85% of its internal stated goals, a metric that signals the airline’s reward for meritocracy.
The scheme also underscores a cultural shift at the airline after Tata took over. When it was the government flag carrier, employees and their families got complimentary tickets. Tatas ended this and are now focused on performance, rather than freebies.
Air India’s decision comes amid a leadership change. On 30 March, chief executive Campbell Wilson resigned, but will remain with the airline until a successor is named. His five-year stint was to end in July 2027. A panel has been set up to scout for Wilson’s successor.
On 10 April, Tata Sons chairman N. Chandrasekaran, also Air India chairman, told employees that the group remains committed to the airline, and urged them to focus on execution during these challenging times.
Air India is Tatas’ largest loss-making firm. In FY25, its standalone revenue rose 13% to ₹61,080 crore and losses fell to ₹3,976 crore from ₹5,031 crore. Low-cost arm Air India Express’s revenue rose 26% to ₹16,033 crore, but losses were up fourfold to ₹5,822 crore.
“We also heard the chairman make a statement in the townhall a couple of days back, requesting employees to put in extra effort. So, I think all of this is in line with a broader push to encourage employees to work harder, as the turnaround seems to be becoming more difficult than initially anticipated,” said Jain of Singhania & Co.