Why is Air India seeking Rs 10,000 crore from Tata Sons, SIA? New report sheds light on crisis

A new report has revealed that Air India has sought a Rs 10,000 crore ($1.14 billion) lifeline from its owners Tata Sons and Singapore Airlines (SIA), amid an ongoing crisis from which it struggles to escape.

This comes nearly five months after the devastating Air India crash of June 12 that killed 260 people—241 passengers and 19 people in the vicinity of the crash site.

A slew of technical snags also affected the airline's flights in the months that followed, making it difficult for the airline to regain its reputation and modernise its fleet.

The airline seeks funds to overhaul its systems and services as well as to develop in-house engineering and maintenance departments, a Reuters article said, citing a Bloomberg report with inputs from people in the know.

Tata Sons, which bought Air India in 2022, currently has a 74.9 per cent stake in the airline, with Singapore Airlines holding the rest. However, the Bloomberg report added that any financial support would be proportional to ownership, with the owners deciding whether the funding would be via an interest-free loan or via equity.

At an aviation event in Delhi, Air India Managing Director and CEO Campbell Wilson on Wednesday pointed out that the Aircraft Accident Investigation Bureau’s (AAIB) interim report on the AI-171 crash indicated there was "nothing wrong with the aircraft, engines, or practices that required changing".

The AAIB report of July 12 had revealed that fuel supply to both engines was cut off shortly after take-off. Though the switches were turned back on seconds later, the damage was done, and the AI-171, failing to attain enough thrust, crashed into a medical college hostel soon after.

However, Wilson also said on Tuesday that India-Pakistan airspace bans on each other after the Pahalgam attack had led to major losses for Air India, which has since had to use alternative routes around Pakistan.

This has led to increased fuel consumption, that, in turn, led to a loss of Rs 4,000 crore for India, he said.

Air India's attempts to modernise its fleet have also been marred by issues like delayed jet deliveries due to geopolitical tensions.

"This year will be quite challenging from a business perspective," Wilson added.

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