Air India is facing a significant financial setback, with projections indicating a potential $1.6 billion loss for the financial year ending March 31, 2026. This grim forecast follows a turbulent year marked by a devastating plane crash in Ahmedabad and operational disruptions stemming from airspace closures. The losses threaten to derail the airline's ambitious turnaround plan initiated after its acquisition by the Tata Group.
The tragic incident occurred on June 12 when Air India flight AI171, a Boeing 787-8 Dreamliner en route to London Gatwick, crashed shortly after takeoff from Sardar Vallabhbhai Patel International Airport in Ahmedabad. The crash resulted in the deaths of 241 of the 242 people on board and 19 individuals on the ground.
In addition to the direct costs associated with the crash, Air India's financial performance has been further impacted by the closure of Pakistani airspace following military tensions with India. This closure forced the carrier to adopt longer, more expensive routes to Europe and the US, leading to increased fuel consumption and operational costs. These airspace restrictions alone are estimated to have cost the airline up to $600 million annually.
The projected losses represent a major setback for Air India, which had been showing signs of progress toward profitability before the crash. The airline had been aiming for operational break-even this fiscal year, but that goal is now out of reach.
Air India has lost ₹32,210 crore over the last three years. The airline sought at least ₹10,000 crore in fresh financial support last year, highlighting the scale of its capital needs.
The airline's management submitted a new five-year plan projecting profits only in the third year, but the board of directors rejected it, seeking a more aggressive turnaround strategy. Adding to the uncertainty, the Tata Group has reportedly begun scouting for a new Chief Executive Officer to replace current CEO Campbell Wilson. However, this search may not conclude until the crash report is released.
Despite these challenges, Air India is moving forward with its fleet modernization plans. By 2026, the airline intends to introduce six new wide-body jets, including Boeing 787-9 and Airbus A350-1000 models, alongside retrofitted Boeing 787-8s. These upgrades are part of a broader effort to enhance passenger experience and restore confidence in the airline.
Air India has started the process of returning personal belongings to the families affected by the Ahmedabad crash. The airline spokesperson stated that over 22,000 personal belongings have been preserved and listed on a dedicated portal.
The coming years will be critical for Air India as it navigates financial headwinds and strives to regain its position as a leading global airline. The airline's ability to implement its turnaround plan and restore passenger confidence will be crucial to its long-term success.
