Air India Set to Post ₹15,000 Cr Loss as Crash and Airspace Curbs Ground Turnaround

Tata Group-owned Air India is set to post its largest-ever annual loss after the deadly aircraft crash last year and regional airspace restrictions reversed the airline’s recovery momentum.

The airline is expected to report a loss of at least ₹15,000 crore ($1.6 billion) for the financial year ending March 31, 2026. The setback comes at a time when Air India had been inching closer to profitability under a multi-year turnaround plan, Bloomberg reported citing sources.

According to the report, earnings were severely impacted after Pakistan closed its airspace to Indian carriers, forcing airlines to take longer and more expensive routes to Europe and the United States. The closure came after India’s suspension of the Indus Waters Treaty and bilateral trade with Pakistan after the terror attack in Pahalgam, Jammu and Kashmir, which killed 26 people.

The financial blow was compounded by the fatal Dreamliner crash in Gujarat in June, 2025, which claimed the lives of over 240 people. The accident not only caused reputational damage but also disrupted operations, undoing years of restructuring efforts. Air India’s management had earlier aimed to achieve operational break-even this fiscal year, but profitability is now out of reach, the report said.

The losses come amid a difficult year for India’s aviation sector. Repeated flight delays and cancellations at rival carrier IndiGo have drawn attention to the challenges of operating in a duopoly-dominated market, further straining passenger confidence.

A new five-year business plan submitted by Air India’s management projected profitability only by the third year. However, the airline’s board reportedly rejected the proposal and asked for a more aggressive turnaround strategy, Bloomberg reported.

Air India has accumulated losses of ₹32,210 crore over the past three years, Bloomberg said citing data from government filings compiled by business intelligence platform Tofler. The airline had also sought ₹10,000 crore in fresh funding last year, the media portal had said in its separate report October 2025.

The mounting losses are becoming a concern for both owners, Tata Group and Singapore Airlines. Tata Group has also begun scouting for a new CEO to replace Campbell Wilson, although the search may reportedly conclude only after the aircraft crash investigation report is released.

Singapore Airlines, which acquired a 25.1% stake following the merger of Vistara with Air India in 2024, has also seen its earnings affected. Despite this, it continues to support Air India’s restructuring, including efforts to bring aircraft maintenance operations in-house, the report added.