Air India seeks fresh $1.5 billion funding as losses mount

Air India is seeking around $1.5 billion in fresh equity funding from its owners, Tata Sons and Singapore Airlines, as the airline faces mounting losses while undertaking a multibillion-dollar transformation, two people familiar with the matter told Reuters.

The request would rank among the largest publicly reported shareholder funding demands since Tata Group took control of the former state-owned carrier in 2022. The funds are expected to help finance Air India’s turnaround, including the refurbishment of its existing fleet.

Air India and its budget subsidiary Air India Express reported combined losses of $2.33 billion for the fiscal year ended in March, more than double the previous year’s losses. The performance has also weighed on Singapore Airlines’ profitability.

“Air India wants the funds immediately, though the infusion is likely to happen in tranches. Singapore Airlines would need to contribute its share of the proposed infusion for the investment to go through,” one of the sources said.

The airline is seeking the funding in the form of fresh equity, the sources said. Discussions remain ongoing and no final decision has been reached, they added, speaking on condition of anonymity because they were not authorized to discuss the matter publicly.

Singapore Airlines, which owns about 25% of Air India, said it was working closely with Tata Sons to support the airline’s transformation program but declined to comment on its finances.

Air India has faced additional challenges, including Pakistan’s restrictions on Indian carriers’ use of its airspace, disruptions to its international network stemming from the US-Israeli war with Iran, and the aftermath of a deadly crash last year that killed 260 people.

The funding request also comes as Tata Sons Chairman N. Chandrasekaran prepares to step down in February following months of disagreements with the group’s controlling charitable trust, partly over Air India’s losses.

Chandrasekaran has previously said Air India’s turnaround could take up to a decade, citing persistent supply-chain disruptions and the need to overhaul the carrier’s legacy systems, corporate culture and fleet.

The airline has also sought to defer deliveries of hundreds of aircraft ordered from Airbus and Boeing, as Tata pushes the carrier to reduce costs and curb its record losses.

“Air India is expected to continue requiring capital infusions in the coming years,” one of the sources said.

By Vafa Guliyeva