The retrenched crew rejoined work on Friday
India's biggest private airline, Jet Airways, has reinstated more than 800 of its employees whose dismissal on Wednesday sparked public protests.
Its chairman, Naresh Goyal, said the move had been his alone and apologised "for all the agony you went through".
Reports suggest that the government persuaded Mr Goyal to take back the employees, but he denied this.
The company had announced it planned to lay off a total of 1,900 staff in the coming days in an effort to cut costs.
India's once booming aviation sector has been hard hit by soaring costs, mainly due to global fuel price rises.
Earlier, Air India said it was planning to offer nearly 15,000 of its employees leave without pay for up to five years.
A spokesman for the state-owned airline stressed that the offer would be voluntary.
'Tears in the eyes'
Jet Airways had announced on Wednesday that some 800 cabin crew who were recently recruited for a planned expansion programme would be laid off, and that it expected to cut a further 1,100 jobs.
Hundreds of Jet Airways employees held a protest in Mumbai after hearing about job cuts, while many politicians demanded an investigation.
Late on Thursday, Jet Airways chairman Naresh Goyal said that he had personally decided to reverse the cost-cutting decision and reinstate the cabin crew.
"I apologise for all the agony you went through," he told a news conference in Mumbai, adding that he could not bear to "see tears in their eyes".
"The management will have to understand sometimes in a family there are disagreements, but the father of the family decides."
Mr Goyal also stressed that the decision had not been the result of political pressure or meetings with any concerned parties.
Federal aviation minister Praful Patel told reporters that he had spoken to Mr Goyal about resolving the problem.
"I had also told him that in 24 hours we must find a resolution to this problem, otherwise we in the ministry would certainly not be very happy with the approach of Jet Airways," he said.
"Wisdom has [now] prevailed and we are all happy."
Channels showed pictures of reinstated Jet Airways employees celebrating the decision and returning to work on Friday.
On Monday, Jet Airways announced a code-sharing alliance with another private Indian airline, Kingfisher, to help cut costs.