Air India posted a record annual loss of about $2.8 billion, or nearly Rs 26,798 crore at current exchange rates, for 2025-26, as disruptions linked to the Iran conflict, closure of Pakistani airspace for Indian carriers, high fuel prices and aircraft supply constraints weighed heavily on operations, according to disclosures made by Singapore Airlines.
Official sources had indicated after the company’s board meeting last week that the company’s losses for the fiscal stood at around Rs 22,000 crore.
The widening losses have emerged at a time when the Tata Group is attempting an ambitious turnaround of the airline through fleet modernisation, network expansion and integration of its full-service and low-cost carriers. Industry executives said the combination of geopolitical disruptions and persistent aircraft shortages had sharply increased operating costs while constraining capacity deployment on international routes.
SIA Impact
The financial impact of the losses has also hit Singapore Airlines (SIA), which owns a 25% stake in the enlarged Air India Group following the merger of Vistara with Air India. In its latest annual disclosures, SIA said its share of Air India’s losses translated into a hit of about $945 million on its books.
The Singapore carrier’s auditors also flagged “indicators of impairment” in the investment, citing uncertainty arising from operating conditions and geopolitical developments. Pakistan’s airspace closure has forced Indian airlines to take longer routes on several westbound flights, raising fuel burn and crew costs. At the same time, the conflict in West Asia and higher jet fuel prices disrupted international travel demand and network planning for carriers operating through the region.
Air India has additionally been grappling with aircraft delivery delays and engine-related issues affecting capacity addition plans across the industry. The airline has been forced to cut or adjust some international operations amid shortages of wide-body aircraft and maintenance bottlenecks.
Long-Haul Hurdles
Despite the losses, Singapore Airlines said it remained committed to the Air India investment and continued to support the long-term transformation strategy being pursued jointly with the Tata Group. SIA had acquired its stake in the merged airline entity as part of the Vistara-Air India consolidation completed last year.
The Tata Group has projected that Air India’s integration and restructuring process will take several years, with significant investments planned in fleet upgrades, cabin retrofits, technology systems and service improvements. The airline has already placed one of the world’s largest aircraft orders and has been expanding its international footprint in an attempt to regain market share from foreign carriers.
However, aviation analysts said the latest losses underscored the scale of challenges facing the airline industry amid geopolitical instability and rising operating costs, particularly for carriers dependent on long-haul international networks.