Rohit Nandan, joint secretary in the Civil Aviation Ministry, will replace Arvind Jadhav, Chairman and Managing Director (CMD) of Air India.

Sources had earlier said that there is also a proposal to create two deputy MDs for Air India and Indian Airlines. Officers including Petro-Chemicals secretary K Jose Cyriac, Cochin Airport CEO Kurien and another official in the aviation ministry had been short-listed for the top job, according to sources. However, they had all declined to accept the offer.

Mr Jadhav has been under fire for his handling of the pilots strike. Air India's 40,000 employees have not received their salary for June and July and performance linked incentives (PLI) from April to July. Currently, the airline is laden with a cumulative debt of Rs. 40,000 crore that it incurred over aircraft acquisition, and as short-term loans to maintain its operations.

The airline posted losses around Rs. 7,000 crore for the last fiscal. Just last week, Comptroller and Auditor General's (CAG) report on Air India slammed the airline's management for lack of foresight and said the decision to buy new aircraft had caused a loss of Rs. 200 crore.

A day later, former aviation minister and BJP MP Rajiv Pratap Rudy questioned the appointment of Mr Jadhav as the CMD of Air India. Rudy alleged, based on an RTI reply received from the Cabinet Secretariat, that Jadhav - who became Chairman and Managing Director (CMD) of Air India in April 2009 - was selected by the Search Committee despite having no "domain experience". He said that the PMO had "manipulatively subverted" the selection process to benefit Mr Jadhav, and asked Prime Minister Manmohan Singh to clear the air on the issue.