Ashwani Lohani has been appointed as the new chief of ailing State-owned airline Air India, replacing Rohit Nandan, whose extended term will end on Friday, 21 August.

Lohani, a 1980 batch Indian Railway Service of Mechanical Engineers (IRSME) officer, will be the chairman and managing director of Air India for three years. Currently, he is the managing director of Madhya Pradesh Tourism Development Corporation.

"Lohani is a perfect choice for the job due to his considerable experience with public sector undertakings in the past and his operational experience as Divisional railway manager in Delhi," an airline source told The Economic Times.

Lohani, a qualified mechanical engineering graduate, has a long experience in managing public sector undertakings (PSUs). He worked as the CMD of Indian Tourism Development Corporation (ITDC) and was responsible for turning Delhi's Ashoka Hotel, which had been facing severe losses for years, profitable.

Outgoing Air India chief Nandan was given one year extension last year. Under his tenure, Air India made a noticeable improvement in performance and also became a member of the 27-member global airlines grouping, Star Alliance, The Hindu reported.

Air India, which currently holds a fifth of the market share in domestic passenger traffic, has been making losses for years and has come under severe criticism for escalating costs. The Ministry of Finance said last month that it would fund Rs 800 crore to the airline, in addition to Rs 2,500 crore allocated in the Budget this year.

Air India had posted a net loss of Rs 5,547 crore in the last fiscal year ending March 2015. The carrier had received a bailout fund of Rs 30,000 crore from the government in 2012, NDTV Profit reported.