Air India’s troubles appear to be deepening after the tragic air crash in Ahmedabad. According to a Bloomberg report, the airline has asked its parent companies, Tata Sons Pvt. and Singapore Airlines Ltd., for financial support of around Rs 100 billion.
Air India struggles to reach break-even, seeks funding from owners
The report, quoting people familiar with the situation, said the airline is struggling with the aftermath of the crash while also dealing with other operational challenges. The funding request is said to include plans to upgrade Air India’s systems and services, and to build its own in-house engineering and maintenance units. The sources asked not to be named, as the discussions are private.
Air India is still far from its target of breaking even by the end of March next year, as it continues to face a series of setbacks. The request for additional funds highlights how difficult it is to survive in the country’s competitive aviation market, where several airlines have shut down after heavy financial losses, the report said.
Currently, Interglobe Aviation Ltd., which operates IndiGo, is the only profitable domestic airline which holds more then 64% of the market share.
Air India is 74.9% owned by the Tata Group, while Singapore Airlines (SIA) owns the remaining 25.1%. Any new financial support would be provided according to this ownership ratio. The owners will also decide whether the funding will come as an interest-free loan or through equity.
Bloomberg said that when they contacted requesting comments on the funding request, Tata Sons, Air India, and Singapore Airlines did not respond.
Air India’s turbulent year: Crash, curbs, and a fight to stay afloat
Air India’s path to profitability took a major hit in early June when it was forced to fly longer routes for its west-bound flights due to airspace restrictions following an armed border clash with Pakistan in May.
The situation got worse after one of its Boeing 787 Dreamliner jets crashed minutes after takeoff from Ahmedabad on June 12, killing everyone on board except one passenger. The tragedy sparked serious safety concerns and prompted DGCA to launch a full system-wide audit of the airline.
As a result, Air India reduced its international operations on widebody aircraft by about 15% between June and August, which further cut into its revenue.
Since the crash, Singapore Airlines, which holds a key stake in Air India, has become more deeply involved in managing critical areas like engineering, operations, and airport services.
Sources said Air India Engineering Services Ltd., a government-owned company that handles maintenance for Air India, will receive funding support to help the airline build its own hangars and boost maintenance capabilities at major airports across India.
The Bloomberg report further quoted the officials saying that the airline is also reviewing ground operations at other airports to improve efficiency and safety.
