Air India seeks $1.1 bn from owners after crash, airspace restrictions

After facing multiple setbacks, the ailing carrier is far from its goal of achieving operational break-even by the end of March next year and has sought ₹10,000 cr from Tata Sons, Singapore Airlines

Months after the deadly crash in Ahmedabad that left over 240 people dead, Air India is now seeking ₹10,000 crore ($1.1 billion) in financial support from its owners, Tata Sons and Singapore Airlines, as it grapples with the aftermath, along with other challenges, Bloomberg reported.

 

Citing sources, the report added that the request from Air India includes funding to upgrade the carrier's systems and services and to build in-house engineering and maintenance departments.

 

After facing multiple setbacks, the ailing carrier is far from achieving its goal of breaking even by the end of March next year. Its request for additional funding sheds light on the difficulties of surviving in India's aviation market, where several carriers have exited after incurring losses. InterGlobe Aviation, which operates IndiGo, is currently the only profitable domestic airline, with over 64 per cent market share.

 

Air India is jointly owned by Tata Sons and Singapore Airlines. While the Tata Group has a 74.9 per cent stake in the carrier, the remaining is held by Singapore Airlines. The report suggests that any financial aid to the carrier would be proportional to ownership. However, the owners will decide if the funding will take the form of an interest-free loan or equity.

Air India's decline

 

The carrier's path to profitability had already begun to falter after it was forced to operate longer non-stop west-bound flights from India due to airspace restrictions imposed after India and Pakistan engaged in military confrontations in May. The Indian armed forces launched a pre-emptive, coordinated strike on terrorist infrastructure in Pakistan and Pakistan-occupied Kashmir. Codenamed 'Operation Sindoor', the strikes were in response to the deadly April 22 Pahalgam terror attack, which claimed the lives of 26 people, mostly tourists.

 

The financial position of the carrier worsened further after a Boeing 787 Dreamliner jet bound for London, on June 12, crashed shortly after take-off from Ahmedabad, killing all but one on board.

 

In the wake of the tragedy, India's aviation regulator, the Directorate General of Civil Aviation (DGCA), ordered a comprehensive system-wide safety audit. The carrier also reduced its international services operated by widebody jets by 15 per cent between June and August, further denting its revenue.

Air India to incur loss of ₹4,000 cr: CEO

 

Earlier this week, Air India's Chief Executive Officer (CEO), Campbell Wilson, said that while there are many uncertainties that are affecting the overall travel demand, they cannot derail the carrier. He further highlighted that the company is expected to incur losses worth ₹4,000 crore after Pakistan's airspace restrictions.