Air India braces for record $1.6 billion loss after Ahmedabad crash

Air India Ltd is set to report a record annual loss after a deadly aircraft crash and regional airspace shutdowns reversed progress towards a long-anticipated turnaround, according to people familiar with the matter, Bloomberg reported.

The airline, which is jointly owned by Tata Group and Singapore Airlines Ltd, is on track to post a loss of at least Rs 150 billion for the financial year ending March 31, the people said, speaking on condition of anonymity as the information is private. Earnings were further hit after Pakistan closed its airspace to Indian airlines following a military clash with India, forcing carriers to operate longer and more expensive routes to Europe and the United States, they added.

The setback marks a sharp reversal for the carrier, which had been edging towards profitability before the June Dreamliner crash that killed more than 240 people and erased years of recovery efforts. Management had been targeting operational break-even in the current financial year, but profitability is now out of reach, the people said.

The losses come amid a turbulent period for India’s aviation sector, characterised by heightened passenger anxiety, frequent flight delays and large-scale cancellations by a rival airline, developments that have again drawn attention to the country’s duopolistic aviation market.

Spokespersons for Air India, Tata Group and Singapore Airlines did not respond to emailed requests for comment on the reported losses.

According to the people, Air India management had submitted a new five-year business plan projecting profitability only in the third year, but the board rejected the proposal and asked for a more aggressive turnaround strategy.

Government filings compiled by business intelligence platform Tofler show that Air India has accumulated losses of Rs 322.1 billion over the past three years. The airline also sought at least Rs 100 billion in fresh financial support last year, Bloomberg News reported in October.

The mounting losses are now emerging as a concern for both shareholders. Tata Group has begun searching for a new chief executive officer to replace Campbell Wilson, although the process may not be concluded until the crash investigation report is released.

Singapore Airlines, which acquired a 25.1 per cent stake in Air India after the merger of Vistara with the carrier in 2024, has seen its own earnings weighed down by Air India’s performance, even as it supports the airline’s restructuring efforts, including plans to bring aircraft maintenance operations in-house.