Tata Group-owned Air India is likely to report a full-year loss exceeding Rs 20,000 crore for the fiscal ended March 2026—nearly double the previous year—raising concerns at Bombay House. The airline’s deteriorating financials come at a time when the broader aviation sector itself is under severe strain, suggesting that the pain is far from being company-specific and could deepen if geopolitical tensions persist.
The carrier posted a loss of about Rs 16,000 crore in the nine months through December 2025 on revenue of Rs 70,000 crore, according to people familiar with the matter. This is sharply higher than an earlier internal projection of a full-year loss of around Rs 2,000 crore by Tata Sons.
Air India losses highlight wider pressure on aviation sector
In FY25, Air India had reported a consolidated loss of Rs 10,864 crore on operating revenue of Rs 76,754 crore. While it remains one of the group’s largest revenue contributors, it is also its biggest lossmaker. A combination of factors has weighed on performance: elevated fuel prices, airspace disruptions linked to the Iran conflict, the Ahmedabad accident last June, and persistent operational inefficiencies. Nearly four years after its acquisition in 2022, a sustained turnaround remains elusive.
Emails sent to Tata Sons and Air India on Tuesday did not elicit a response, but analysts say Air India’s troubles must be viewed in the context of a sector grappling with multiple headwinds. India’s largest airline, IndiGo, reported a 78% plunge in net profit to Rs 549 crore in the December quarter (Q3FY26), hit by flight disruptions and elevated crew costs, even as revenue rose 6% to RS 23,472 crore. The sharp divergence between revenue growth and profitability underscores the stress across the industry.
Rating agency Crisil has also flagged subdued operating performance for Air India in FY26 amid a series of external shocks. Airspace closures beginning April 2025 disrupted key North America routes, leading to longer flight times, higher fuel burn and rising costs. These pressures are not unique to Air India and have affected the entire industry.
The June incident further dented passenger confidence, prompting a voluntary “safety pause” that included temporary aircraft groundings between July and September 2025. At the same time, unresolved US visa issues have weighed on demand in key international markets, while aircraft delivery delays have constrained capacity expansion.
These challenges, Crisil noted in December, are likely to persist, keeping pressure on costs, capacity and overall operating metrics. With geopolitical tensions still elevated, the outlook for airlines—including Air India—could worsen if disruptions continue.
Forex swings keep cost pressure high for airlines
The sector also remains vulnerable to currency volatility. Lease rentals and maintenance costs—accounting for 20-25% of operating expenses—are dollar-denominated. While Air India benefits from a natural hedge through international revenues and a hedging programme introduced in 2024, forex movements continue to pose risks.
Against this backdrop, mounting losses at Air India and Tata Digital have emerged as a key concern for Tata Trusts, which owns 66% of Tata Sons. The airline had also sought an additional equity infusion of `10,000 crore from its parent in the previous fiscal. Following the merger with Vistara in November 2024, Singapore Airlines holds a 25.1% stake in the combined Air India entity.
For now, Air India’s swelling losses are as much a reflection of internal challenges as of an industry caught in turbulence. And unless the external environment stabilises—particularly on fuel and geopolitics—the path to recovery may remain longer and steeper not just for Air India, but for the sector as a whole.