Air India set for record annual loss after crash, airspace curbs derail turnaround

Air India is expected to post its largest-ever annual loss after a deadly crash and prolonged airspace restrictions erased hard-won progress towards a turnaround, according to people familiar with the airline’s finances.

The full-service carrier, jointly owned by the Tata Group and Singapore Airlines, is on course to record a loss of at least Rs 15,000 crore for the financial year ending 31 March, sources quoted by Moneycontrol said. The setback follows the fatal Boeing 787 Dreamliner crash in June last year and the closure of Pakistani airspace to Indian airlines after a military confrontation between the two countries.

The airspace restrictions forced Air India and other Indian carriers to operate longer routes to Europe and North America, significantly increasing fuel consumption and operating costs. These pressures compounded the financial impact of the crash, which killed more than 240 people and dealt a major blow to passenger confidence.

The reversal marks a sharp contrast with the airline’s position earlier in the year. Under Tata ownership, Air India had been moving closer to profitability and was targeting operational break-even in the current financial year. That goal is now considered unattainable, with the sources saying the crash effectively undid years of restructuring efforts.

The losses come amid a turbulent period for India’s aviation sector, characterised by heightened passenger anxiety, frequent delays and widespread cancellations at a rival airline. The disruption has also drawn attention to the country’s highly concentrated airline market, dominated by two major players.

Air India, Tata Group and Singapore Airlines did not respond to requests for comment. According to the sources, management recently submitted a new five-year business plan that projected a return to profit only in the third year. The board is understood to have rejected the proposal, seeking a faster and more decisive turnaround strategy.

Financial disclosures compiled by business intelligence platform Tofler show that Air India has accumulated losses of ₹322.1 billion over the past three years. The airline is also reported to have sought at least ₹100 billion in additional financial support last year.

The deepening losses are increasingly worrying both shareholders. Tata Group has reportedly begun looking for a new chief executive to succeed Campbell Wilson, although the process may be delayed until the official crash investigation report is made public.

Singapore Airlines, which acquired a 25.1 per cent stake in Air India following the merger of Vistara with the national carrier in 2024, has also felt the strain. While it is assisting Air India with restructuring efforts, including bringing aircraft maintenance operations in-house, the Indian carrier’s performance has weighed on its own earnings.

As Air India grapples with the fallout from last year’s crises, the challenge facing its owners will be to restore confidence, contain losses and revive a turnaround that now appears further away than at any point since privatisation.