Air India Ltd, now majority-owned by the Tata Group alongside Singapore Airlines, is expected to report a historic annual loss of at least ₹15,000 crore for the financial year ending March 31, 2026 — its largest on record. This severe downturn reverses progress the airline had made toward stabilising finances and achieving breakeven under the post-privatisation turnaround strategy.
Crash and Operational Setbacks Derail Turnaround
A major factor driving the projected loss is the June 2025 crash of Air India Flight 171, a Boeing 787 Dreamliner that crashed shortly after takeoff from Ahmedabad, killing more than 240 people, both onboard and on the ground. The fatal accident not only led to reputational fallout and shaken passenger confidence but also triggered grounded aircraft, schedule disruptions, and increased scrutiny from regulators and investigators.
In addition to the crash’s impact, prolonged airspace closures by Pakistan amid geopolitical tensions compelled Air India to reroute flights to Europe and North America via longer and more expensive paths, significantly raising fuel and operational costs for the carrier — further eroding financial performance.
Strategic Goals Pushed Out of Reach
Before these setbacks, Air India’s leadership had targeted operational breakeven for FY26 as a key milestone in its multi-year recovery under the Tata-led restructuring. The projected ₹15,000 crore loss means that profitability goals are now widely seen as unattainable for the current fiscal year. Internal projections reportedly showed profits only in subsequent years, but the board has pushed for more aggressive turnaround strategies given the deteriorating performance.
Government and airline filings indicate that Air India has accumulated cumulative losses exceeding ₹32,000 crore over recent years, intensifying pressure on management and shareholders. The airline had previously sought additional capital support to fund restructuring initiatives, highlighting the depth of its financial challenges.
Impact on Stakeholders
The mounting losses have implications for multiple stakeholders:
- Tata Group and Singapore Airlines: Both owners face diminished returns and strategic frustration as the airline’s recovery stalls. Singapore Airlines, holding a significant equity stake post-merger with Vistara in 2024, has also seen its own earnings impacted by Air India’s weak performance.
- Employees and Leadership: With turnaround targets missed, Air India’s board has reportedly begun evaluating leadership changes, although any executive transitions are expected to be contingent on official accident investigation outcomes and broader strategic planning.
- Passengers and Market Confidence: The aircraft crash and ensuing operational challenges have shaken customer confidence, adding pressure on marketing, safety communications, and service reliability efforts across the airline.
Broader Aviation Sector Context
The projected loss at Air India comes amid broader turbulence in India’s aviation industry, where other carriers have also faced financial and operational pressures. For the sector as a whole, rising costs, airspace constraints, and infrastructure limitations underscore persistent challenges even as passenger demand recovers from pandemic-era lows.
Looking Ahead
Air India’s significant projected loss marks a sobering chapter in its post-privatisation journey. The airline’s ability to navigate safety concerns, operational disruptions, and financial headwinds will be critical in shaping its strategic direction in FY27 and beyond. Focus will likely remain on cost control, network optimisation, fleet utilisation, and restoring passenger confidence while aligning with broader industry recovery trends.
