Air India asks Tata Sons, Singapore Airlines for $1.1 billion financial aid

Air India has sought at least Rs 100 billion ($1.1 billion) in financial support from Tata Sons Pvt and Singapore Airlines Ltd (SIA). The development comes at a time when the airline is struggling with financial and logistical issues following the deadly crash of one of its Boeing 787 Dreamliners headed for London in Ahmedabad on June 12.

Funds needed for system, service overhauls

The airline’s request includes funds for overhauling its systems and services as well as for setting up its own departments of engineering and maintenance, reported Bloomberg, quoting officials.

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The report further states that Air India’s request for funds brings the challenges of operating in India’s aviation market into focus, where several carriers have ceased operations after incurring heavy losses.

It states that the only profitable domestic carrier in the country is Interglobe Aviation Ltd., which operates the IndiGo fleet and currently has a market share of over 64 per cent.

‘Financial support proportional to ownership’

While the Tata Group has a 74.9 per cent stake in Air India, the remaining is held by the SIA. According to the report, the officials said that any financial support would be proportional to ownership.

They also said that it was up to the owners to decide whether the funding would be provided through interest interest-free loan or equity.

What Singapore Airlines said

Tata Sons and Air India are yet to respond to queries in this regard, reported Bloomberg.

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As for the SIA, it stated that it “has been working closely with Tata Sons to aid Air India’s transformation program, adding, “this includes providing our expertise and support to Air India, where necessary.”

However, it directed all questions on financial requirements to Air India.

Issue of Pakistan’s airspace curb

Air India’s aim to boost profitability has been an uphill task since early June, as it had to take longer routes for its non-stop west-bound flights from India after Pakistan closed its airspace for Indian aircraft following the military conflict between the two countries in the aftermath of Operation Sindoor.

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The fact that Air India slashed international flights on wide-body jets by 15 per cent starting June through August has affected its revenue generation.

The maintenance work for Air India is done by AI Engineering Services Ltd, a government-owned entity and formerly a subsidiary of Air India.

According to the Bloomberg report, the financial aid will help Air India scale up its own engineering and maintenance capabilities by building hangars at key airports in the country.