Air India: Turnaround Requires 10 Years, Seeking $1.5 Billion in Financing
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Air India is planning to seek approximately $1.5 billion in new equity financing from its shareholders, Tata Group and Singapore Airlines. This comes months after Air India announced a record annual loss.
This would be one of the largest funding requests Air India has made to its shareholders since its acquisition by Tata Group in 2022, highlighting the financial pressures facing the airline's ongoing turnaround plan.
Air India's previously released financial report showed that in the fiscal year ending March this year, Air India and its low-cost carrier subsidiary, Air India Express, suffered a combined loss of $2.33 billion, more than double the loss of the previous fiscal year.
This loss also dragged down the performance of Air India's shareholder, Singapore Airlines.
A source said, "While Air India wants immediate funding, the injection may be phased. Singapore Airlines needs to contribute in proportion to its shareholding for the investment to be approved."
Both sources indicated that Air India is seeking new equity financing, and discussions are ongoing; no decision has yet been made on the request.
Singapore Airlines, which holds approximately a 25% stake in Air India, stated that it is working closely with the Tata Group to support Air India's transformation plan but declined to comment on Air India's financial situation.
Air India's Turnaround Plans Under Pressure
Air India's financial situation is further pressured by airspace restrictions, including Pakistan's ban on Indian airlines using its airspace and disruptions to its international route network caused by previous Middle East conflicts.
Furthermore, the fatal Ahmedabad air disaster last year, which killed 260 people, has also had a negative aftereffect on Air India.
This capital injection request comes against the backdrop of Tata Group Chairman Chandrasekaran's planned resignation in February next year, following months of disagreements with the group's holding charitable trust, partly due to Air India's losses.
Chandrasekran has stated that Air India's return to profitability could take up to ten years, noting that Air India faces ongoing supply chain disruptions and requires comprehensive reforms to its traditional systems, corporate culture, and fleet.
As the Tata Group pushes for cost-cutting and loss reduction at Air India, the airline is also attempting to postpone the delivery of hundreds of ordered Airbus and Boeing aircraft.
A source told Reuters that Air India is expected to require continued capital injections in the coming years.
Singapore Airlines stated in its annual report: "Air India faces headwinds including industry-wide supply chain constraints, airspace restrictions, limited operations in key Middle Eastern markets, and rising aviation fuel prices."
Singapore Airlines also stated that it remains committed to its investment in the Air India Group.
