Air India is looking to raise around $1.5 billion in fresh equity from its owners, Tata Sons and Singapore Airlines, according to Reuters sources. The airline needs the money as it continues a major turnaround programme and deals with heavy losses.
Air India and Air India Express together reported a record loss of $2.33 billion for the financial year ending March, more than twice the previous year's loss. Singapore Airlines, which owns about 25% of Air India, has also been affected by the airline's poor performance.
The proposed funding could be provided in stages. Singapore Airlines would have to contribute its share for the investment to proceed. However, discussions are still ongoing and no final decision has been made.
AIR INDIA FACES SEVERAL CHALLENGES
The airline's finances have been pressured by several problems, including:
Pakistan's restrictions on Indian airlines using its airspace
Disruptions to international operations linked to the US-Israel war with Iran
The impact of last year's crash that killed 260 people
High costs of upgrading its fleet and older aircraft
Supply-chain problems affecting aircraft deliveries and maintenance
The need to modernise its technology, systems and workplace culture
Tata Sons has been carrying out a multi-billion-dollar transformation of Air India since taking control of the former state-owned airline in 2022.
TURNAROUND COULD TAKE YEARS
Tata Sons Chairman N. Chandrasekaran has previously said that turning Air India around could take up to a decade.
The airline has also asked Airbus and Boeing to delay some deliveries from its large aircraft order as it tries to reduce costs and improve its financial position.
The latest funding request suggests that Air India may need additional capital for several more years before its turnaround is complete.
