Air India Braces for Record Annual Loss After Turbulent Year
Air India is poised to report a staggering annual loss, marking a significant reversal in its turnaround efforts following last year's tragic crash and disruptive airspace shutdowns, according to sources familiar with the matter. The carrier, a joint venture between the Tata Group and Singapore Airlines, is on track to post a loss of at least Rs 15,000 crore (approximately $1.6 billion) for this fiscal year, these individuals disclosed.
Multiple Factors Contribute to Financial Setback
The airline's earnings were severely impacted by Pakistan's closure of its airspace for Indian carriers in the aftermath of Operation Sindoor. This forced airlines, including Air India, to adopt longer and more expensive routes to destinations in Europe and the United States, significantly increasing operational costs. The financial strain was compounded by a broader turbulent period in Indian aviation, characterized by heightened flier anxiety, widespread flight delays, and mass cancellations by competitor IndiGo, which has drawn attention to the market's duopolistic structure.
Crash Undoes Years of Progress Toward Profitability
The reversal is particularly stark as Air India had been gradually moving back toward profitability before the devastating June Dreamliner crash, which claimed over 240 lives. This tragic event effectively erased years of progress, derailing the founders' goal of achieving operational break-even this fiscal year. Sources indicate that profitability is now out of reach, highlighting the profound impact of the incident on the airline's financial trajectory.
Management's Recovery Plan Faces Hurdles
In response to the challenges, Air India's management submitted a new five-year plan that projected profits only by its third year. However, this proposal was rejected by the board, signaling internal disagreements over the path to recovery. Spokespersons for Air India, the Tata Group, and Singapore Airlines did not respond to requests for comments, leaving the airline's future strategies under scrutiny as it navigates this financial crisis.
