Air India is seeking around $1.5 billion in fresh equity from its owners, Tata Sons and Singapore Airlines, as the airline attempts to strengthen its finances while undergoing a costly and long-term transformation, according to two people familiar with the matter.
The proposed funding would be one of the largest publicly reported requests for shareholder support since the Tata Group took control of the former state-owned carrier in 2022. The request comes months after Air India and its budget subsidiary, Air India Express, reported combined losses of $2.33 billion for the financial year ended March.
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The losses were more than double those recorded in the previous year and have also affected the profitability of Singapore Airlines, which owns around 25% of Air India.
According to one of the sources, Air India wants the funds immediately, although the proposed investment could be provided in multiple tranches. Singapore Airlines would also have to contribute its share of the funding for the proposed equity infusion to proceed.
The sources said discussions are still underway and no final decision has been taken. They spoke on condition of anonymity because they were not authorised to discuss the matter publicly.
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 programme but declined to comment on the airline’s finances.
Air India’s Costly Turnaround
The funding request comes as Air India continues a multi-billion-dollar overhaul aimed at modernising its fleet and improving the airline’s overall operations.
The carrier is dealing with several challenges, including the refurbishment of existing aircraft, upgrades to legacy systems and changes to its organisational culture. Air India is also seeking to reduce costs as it attempts to bring down its losses.
Its operations have faced additional pressure from the closure of Pakistani airspace to Indian carriers, disruptions to its international network linked to the US-Israel war with Iran and the fallout from a deadly crash last year that killed 260 people.
Air India has also sought to defer deliveries of hundreds of aircraft ordered from Airbus and Boeing as Tata works to reduce costs and address the airline’s financial performance, according to an earlier Reuters report.
Tata Sons Chairman N Chandrasekaran has previously said that Air India’s turnaround could take as long as a decade. He has pointed to continuing supply-chain disruptions and the scale of work required to overhaul the airline’s systems, culture and fleet.
More Capital May Be Needed
The latest funding request highlights the financial demands of rebuilding Air India after its return to private ownership.
One of the sources said Air India is expected to require further capital infusions in the coming years as the transformation continues.
The development also comes at a significant moment for Tata Sons, with Chandrasekaran preparing to step down as chairman in February following months of disagreements with the group’s controlling charitable trust, including differences partly linked to Air India’s losses.
For Tata, the challenge now is to balance the substantial investment required to rebuild the airline with the need to improve its financial performance.
While the proposed $1.5 billion infusion could provide Air India with additional financial support, the airline’s broader turnaround is expected to remain a long-term process involving fleet upgrades, cost reductions, operational changes and continued investment.
