Air India’s back is broken due to Ahmedabad accident.
Last year was no less than a nightmare for ‘Air India’, a joint venture between Tata Group and Singapore Airlines. The airline which was ready to take a new flight of profit after recovering from years of losses, is now moving towards the biggest economic crisis in history. The tragic plane crash in Ahmedabad not only took hundreds of lives but also broke the financial backbone of the company. According to sources related to the matter, Air India is going to report a huge loss of Rs 15,000 crore (about 1.6 billion dollars) in the financial year ending on March 31.
Hopes of profit dashed
Before the month of June, Air India was leaving behind its old difficulties and getting back on track. The founders of the company had set a target of ‘operational break-even’ (i.e. neither profit nor loss) in this financial year. But the Dreamliner accident in June changed everything. More than 240 people lost their lives in that tragic accident, which put a full stop to the airline’s progress.
The trouble did not end here. Due to military tension with India, Pakistan closed its airspace to Indian aircraft. This had a direct impact on the pockets of Air India. Flights going to Europe and America now have to travel longer distances, due to which fuel and operating costs have started skyrocketing. These two incidents have taken away the hope of profit.
Board not happy with management’s plan
The ever-increasing losses have put pressure on both the owners of the airline, Tata Group and Singapore Airlines. If sources are to be believed, the current management of the airline had submitted a new ‘5 year plan’ to the board, in which it was said that there would be profit from the third year. But the board has completely rejected this plan. The board believes that more aggressive and faster reforms are needed to bring the airline back on track. Amidst this turmoil, the murmur of change of leadership has also increased. Tata Group is looking for a new face to replace the current CEO Campbell Wilson. However, this search may continue till the final investigation report of the plane crash comes.
Total loss to the company is Rs 32,210 crore
The financial health of Air India was already fragile. According to the data of business intelligence platform ‘Tofler’, the company has suffered a total loss of Rs 32,210 crore in the last three years. Last year itself, the airline had demanded new financial assistance of Rs 10,000 crore. Singapore Airlines, which had taken 25.1 per cent stake in Air India after the merger with Vistara in 2024, is now itself feeling the pain of these losses. The impact of Air India’s poor performance is also visible on Singapore Airlines’ earnings.