The airline Air India has approached its owners, Tata Sons and Singapore Airlines, requesting approximately $1.5 billion in fresh equity capital. This request came several months after the second-largest Indian airline recorded a record annual loss.
According to information obtained from two sources familiar with the situation, this is one of Air India's largest publicly announced funding requests since Tata took control of the former state-owned airline in 2022. This need for funds highlights the challenges the airline faces during its multi-billion dollar large-scale modernization, which includes updating its existing fleet.
In the fiscal year ending in March, the airline and its budget subsidiary Air India Express reported combined losses of $2.33 billion, more than double the losses of the previous year. These financial losses also negatively impacted Singapore Airlines' profits.
One source indicated that Air India needs the funds immediately, although the injection will likely occur in tranches. The source also noted that Singapore Airlines must contribute its share to the proposed infusion for the investment to proceed. Sources clarified that the request is in the form of new equity capital, and discussions are ongoing, with no final decision yet made.
Singapore Airlines, which owns about 25 percent of Air India, stated that it is closely cooperating with Tata Sons to support Air India's transformation program but declined to comment on the airline's financial condition. Furthermore, Air India has faced several issues, including Pakistan's ban on Indian airspace, disruptions to its international network due to the US-Iran war, and the aftermath of a fatal aviation accident last year that claimed 260 lives.
The funding request coincides with the preparation for the departure of Tata Sons chairman, N. Chandrasekaran, who plans to step down in February following several months of disagreements with the group's managing charitable trust, partly concerning Air India's losses. Chandrasekaran had previously stated that the transformation process of Air India could take up to ten years, citing constant supply chain disruptions and the need to reform the airline's outdated systems, culture, and fleet.
Earlier this year, Reuters reported that Air India was trying to postpone deliveries of hundreds of aircraft ordered from Airbus and Boeing, as Tata insists on cost reduction and curbing record losses. One source added that Air India is expected to continue needing capital injections in the coming years.