Air India Likely to Post $1.6 Billion Loss in FY26; Ahmedabad Crash and Airspace Curbs Weigh on Turnaround
New Delhi, January 23. Tata Group-owned full-service carrier Air India is expected to report a net loss of at least $1.6 billion in the financial year ending March 2026, dealing a setback to the airline’s ongoing transformation and turnaround strategy.
The projected loss comes in the aftermath of the deadly Ahmedabad–London crash in June 2025, which claimed more than 240 lives. The tragedy not only resulted in immediate operational and compensation-related costs but also disrupted network planning, dented consumer confidence on certain long-haul routes, and triggered heightened regulatory scrutiny and safety audits. Together, these factors have added financial and operational strain at a critical phase of the airline’s restructuring.
Air India’s performance is also being affected by the continued closure of Pakistani airspace to Indian carriers following heightened tensions between the two countries. The restriction has forced Indian airlines operating westbound international routes to Europe and North America to take longer flight paths, increasing fuel burn, crew duty hours, and overall operating costs. For a carrier like Air India, which is aggressively rebuilding its long-haul network, the impact on margins has been significant.
Before the crash, Air India had been moving steadily toward operational break-even, supported by fleet modernization, route rationalization, product upgrades, and integration synergies following the merger with Vistara in 2024. The airline’s management had been targeting an operational break-even in FY26 as part of its multi-year revival roadmap under the Tata Group. However, with mounting cost pressures and unforeseen disruptions, profitability now appears to be further out of reach in the near term.
Singapore Airlines, which holds a 25.1% stake in Air India following the Vistara merger, has also felt the financial impact. While the partnership is aimed at strengthening Air India’s international positioning and operational standards, the near-term drag on earnings has weighed on overall performance. As part of the restructuring plan, efforts are underway to bring more aircraft maintenance operations in-house to reduce long-term costs and improve efficiency, though such structural changes typically take time to deliver measurable financial gains.
Despite the setbacks, Air India continues to pursue its broader transformation strategy, which includes a historic aircraft order, brand revamp, cabin upgrades, and systems integration across its combined operations. However, the combination of extraordinary events and geopolitical headwinds has made the road to profitability more challenging than initially anticipated.
