Air India Seeks $1.1 Billion Lifeline From Tata, SIA After Crash
JustinUnprofitable Air India Ltd. is seeking at least 100 billion rupees ($1.1 billion) in financial support from its owners Tata Sons Pvt. and Singapore Airlines Ltd., said people familiar with the matter, as the airline grapples with the aftermath of a deadly plane crash among other challenges.
Unprofitable Air India Ltd. is seeking at least 100 billion rupees ($1.1 billion) in financial support from its owners Tata Sons Pvt. and Singapore Airlines Ltd., said people familiar with the matter, as the airline grapples with the aftermath of a deadly plane crash among other challenges.The request includes funds for overhauling Air India's systems and services as well as developing in-house engineering and maintenance departments, some of the people said, requesting not to be identified as the information is not public.
The ailing carrier is far from a goal of breaking even operationally by end of March next year after facing multiple setbacks. The appeal for more funding underscores the challenges of operating in the India's aviation market where many carriers have exited after burning cash. Sector leader Interglobe Aviation Ltd., which operates the IndiGo fleet, is the only profitable domestic carrier with over 64% market share.The carrier is 74.9% owned by the Tata Group, with the rest held by SIA. Any financial support would be proportional to ownership, the people said, adding that the owners would decide if the funding will be an interest-free loan or via equity.
Spokespersons for Tata Sons, Air India and SIA did not respond to emailed queries seeking comments on the financial support sought by the carrier.Air India's pursuit of profitability was already tottering in early June as it had to fly longer hours for its non-stop west-bound flights from India after an armed border conflict in May with Pakistan led to airspace curbs.The financial math worsened after one of its Boeing 787 Dreamliner headed for London crashed immediately after take off from Ahmedabad on June 12, killing all but one on board. Safety concerns following the tragedy led to a system-wide audit by India's aviation regulator. Air India also slashed international flights on widebody jets by 15% starting June through August, which curbed revenue as well.
SIA is closely involved in key functions such as engineering, operations and airport services at the airline after the Ahmedabad crash, the people said.AI Engineering Services Ltd. - a government-owned entity and formerly a subsidiary of Air India - does maintenance work for the airline. The financial support will help Air India scale up its own engineering and maintenance capabilities by building hangars at key airports in the country, the people said.
Airport services at six key airports are done through Air India-Singapore Airport Terminal Services - an equal joint venture between Air India and SATS, the people said, adding that ground services at other airports were also being looked into.
