Air India seeks $1.5 billion from owners Tata and Singapore Air as losses mount

Air India has asked its owners, Tata Sons and Singapore Airlines, for an infusion of about $1.5 billion in fresh equity, two people familiar with the matter told Reuters. The request comes months after India's second-largest airline reported a record annual loss, underscoring the financial strain it faces during an extensive turnaround effort.

If approved, it would be one of the biggest shareholder funding requests since the Tata group took control of the formerly state-owned carrier in 2022. Air India is in the midst of a multi-billion-dollar restructuring that includes upgrading its fleet, modernising legacy systems and changing its corporate culture.

The carrier and its budget arm, Air India Express, together lost $2.33 billion in the fiscal year that ended in March—more than double their losses in the previous year. The mounting losses have also dented the profits of Singapore Airlines, which owns about 25% of Air India.

“Air India wants the funds immediately, though the infusion is likely to happen in tranches. Singapore Airlines would need to contribute its share of the proposed infusion for the investment to go through,” one of the sources said, declining to be named as they were not authorised to discuss the matter publicly.

The request is for fresh equity, the sources added. They said discussions are ongoing and no final decision has been taken. Air India and Tata Sons did not respond to Reuters requests for comment. Singapore Airlines said it was working closely with Tata Sons to support Air India's transformation but declined to comment on the airline's finances.

Air India's difficulties have been compounded by Pakistan's ban on Indian carriers flying through its airspace, disruptions to international routes caused by the conflict between the United States, Israel and Iran, and the aftermath of a fatal crash last year that killed 260 people.

The funding request comes at a time of leadership change at Tata Sons. Chairman N. Chandrasekaran is set to step down in February, following months of friction with the group's controlling charitable trust, partly over Air India's losses. He has said the airline's turnaround could take up to a decade, citing persistent supply-chain problems and the need to overhaul its aging fleet and corporate culture.

Earlier this year, Reuters reported that Air India had sought to postpone deliveries of hundreds of aircraft ordered from Airbus and Boeing as the Tata group pushed the carrier to cut costs and reduce record losses.

“Air India is expected to continue requiring capital infusions in the coming years,” one of the sources added.