Mumbai/New Delhi: Air India posted an estimated loss of nearly $3 billion in FY26, as foreign exchange losses, airspace disruptions and elevated fuel costs battered the Tata Group-owned airline during the year.
The losses were large enough to significantly erode the dividend income parent Tata Sons earned from its cash cow Tata Consultancy Services (TCS) in the previous fiscal year.
According to the full-year earnings released by Singapore Airlines (SIA) on Thursday, the carrier’s share of losses from Air India were at Singapore $945.2 million (US$742.4 million) in FY26, reflecting its 25.1% stake in the Tata Group-owned airline.
With currency conversions factoring in Thursday's exchange rates, as per this shareholding, Air India Group’s total loss for the year is estimated at S$3.76 billion ($2.97 billion), or roughly ₹28,400 crore, at current exchange rates.
To be sure, Tata Sons and employees own 74.9% of Air India, and hence its share of the losses would be about ₹21,270 crore, while the remaining 25.1% is being recognized by SIA.
Tata Sons received about ₹28,292 crore in dividend income from TCS in FY26, down 12.1% from ₹32,184 crore in FY25, according to a Mint report published on 12 April.
Tata Sons is expected to share its financial performance in July, while privately-held Air India will file its earnings with the ministry of corporate affairs in August.
The estimated loss, which includes both full-service carrier Air India and low-cost subsidiary Air India Express, is almost three times the ₹10,859 crore loss reported in FY25, largely due to foreign exchange losses—as aircraft leases, fuel and maintenance expenses are denominated in US dollars—along with the financial impact of the prolonged closure of Pakistani airspace.
Air India’s revenue totalled S$10.53 billion ($8.27 billion), or about ₹79,200 crore, in FY26, according to Singapore Airlines’ annual report published on Thursday.
The Singapore Exchange (SGX) listed airline made fresh investments of S$1.13 billion ($891 million), or about ₹8,530 crore, into Air India during FY26.
“SIA is working closely with its partner Tata Sons to support Air India’s multi-year transformation programme. Air India faces headwinds such as industry-wide supply chain constraints, air space restrictions, constraints on operations to its key Middle East markets, and elevated jet fuel prices,” Singapore Airlines said in its earnings statement.
Singapore Airlines and Air India did not respond to Mint's emailed queries until press time.
Air India has been battling a series of external shocks and internal challenges for more than a year.
The closure of Pakistan's airspace from April 2025 forced Indian carriers, particularly Air India, to take longer routes to West Asia, increasing fuel burn and operating costs.
In June last year, an Air India flight to London was involved in a crash that killed 260 people, bringing the airline under heightened regulatory scrutiny and forcing it to scale back international operations. The carrier was hit again by the West Asia war from late February this year, triggering fresh airspace restrictions, longer flying hours and higher fuel consumption.
At the same time, jet fuel prices surged sharply. Between February and May, aviation turbine fuel prices in India nearly doubled. Air India has since cut international routes and deferred salary hikes as part of cost-control measures.
Moreover, the relentless decline in the rupee against the dollar has also hurt the carrier's profitability, according to an executive privy to the development. As Air India’s lease liabilities are dollar-denominated, this depreciation of the rupee has led to foreign exchange losses for the airline.
Air India is also navigating a leadership transition. Chief executive Campbell Wilson resigned at the end of March and is currently serving his notice period, while the airline has yet to announce a successor.
“These losses reflect a perfect storm of operational disruptions, geopolitical shocks and elevated costs,” said Gagan Dixit, senior vice president - aviation, chemicals, oil & gas analyst at Elara Capital. “Cost-cutting measures such as route cuts, deferring bonuses and increments are already underway at Air India," he said. "The airline should actually look to bring in a more fuel-efficient and new fleet. It will help improve utilization of aircraft and bring down costs.”
Dixit said the management change is already in the offing. “New management will bring in a set of ideas, and perhaps Tatas could take a hard look at the airline's operations and legacy issues again,” he said, adding that a turnaround timeline could now stretch further as Tata balances investments across multiple new businesses.
The Tata group has a complex structure under which business and philanthropy are run through three layers. At the top are the self-governing Tata Trusts that Noel Tata chairs. It owns 65.9% in Tata Sons, while 12.87% is owned by half a dozen group companies, and 18.4% by the Mistry family.
Tata Sons is the holding company of Tata Group firms in the middle layer, which N. Chandrasekaran runs. It primarily depends on dividend income from about 26 listed companies in which it owns shares, and uses this money to invest in group companies for business expansion. Tata Sons earned ₹38,834.6 crore in dividends and share buybacks in FY25, 83% of which came from TCS.
Additionally, Tata Sons is investing in four cash-guzzling businesses, including e-commerce (Tata Digital), Air India, battery manufacturing (Agratas) and semiconductor manufacturing (Tata Electronics). Tata Sons has invested over $11 billion in these four businesses, according to a Mint review of the financials of the four privately-held companies.
