Why Air India Needs $1.5 Bn From Tata, Singapore Airlines

Air India is seeking about $1.5 billion in fresh equity from its owners Tata Sons and Singapore Airlines, months after the airline posted record annual losses, according to a Reuters report.

The funding request comes as Air India continues a multi-billion-dollar transformation programme that includes refurbishing its existing fleet and upgrading legacy systems. Discussions are ongoing and no decision has been taken on the proposed capital infusion, according to the report.

“Air India wants the funds immediately, though the infusion is likely to happen in tranches,” one of the sources told the news agency. Singapore Airlines, which owns around 25% of Air India, would need to contribute its share for the investment to go through.

Why Air India Needs More Capital

Air India and its budget arm Air India Express reported combined losses of $2.33 billion for the financial year ended March, more than double their losses in the previous year, according to the report.

The airline has faced several challenges during its turnaround. These include Pakistan’s airspace restrictions on Indian carriers, disruptions to its international network linked to the US-Israeli war with Iran and the fallout from a deadly crash last year that killed 260 people.

Air India has also been seeking to defer deliveries of hundreds of aircraft on order from Airbus and Boeing as Tata works to reduce costs and bring down its losses, the news agency reported earlier this year.

Tata’s Air India Turnaround Faces Pressure

The proposed funding comes as Tata Sons Chairman N. Chandrasekaran prepares to step down in February after 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. He has pointed to continuing supply-chain problems and the need to overhaul the airline’s legacy systems, workplace culture and fleet.

Singapore Airlines said it was working closely with Tata Sons to support Air India’s transformation programme but declined to comment on the airline’s finances.

The proposed equity infusion could become one of the largest publicly reported funding requests from Air India’s shareholders since Tata took control of the former state-owned airline in 2022. One source told Reuters that the carrier is expected to require further capital infusions in the coming years.