Air India Set to Announce Historic Loss Following Ahmedabad Crash
Air India, a joint venture between Tata Group and Singapore Airlines, is expected to report a record annual loss due to the aircraft crash in Ahmedabad and regional airspace restrictions.
For the fiscal year ending March 31, the airline is projected to record a loss of at least 150 billion rupees (approximately 1.6 billion dollars). The Dreamliner crash in June, which claimed more than 240 lives, has reversed all gains made during the company’s transition to profitability. Additionally, the closure of Pakistani airspace due to military tensions between India and Pakistan has increased the operational burden by forcing European and US flights to take longer and more costly routes.
CEO Search and Restructuring Process The current financial statements and the aftermath of the crash have triggered movement within the management ranks. Tata Group has begun searching for a new name to replace current CEO Campbell Wilson. However, this process is not expected to be completed until the crash investigation report is released. The five-year business plan presented by the company management, which predicted that profitability could only be achieved in the third year, was rejected by the board of directors. It is reported that the board demanded a more aggressive and rapid recovery strategy.
Pressure on Shareholders Increases While Air India’s accumulated losses over the last three years have reached 322.1 billion rupees, the airline requested an additional 100 billion rupees in financial support last year. This situation continues to put pressure on shareholders:
- Singapore Airlines Following the Vistara merger, the airline, which holds a 25.1 percent stake in Air India, is experiencing a decline in its own earnings due to Air India’s weak performance.
- Tata Group Despite integrating the airline’s maintenance operations and undergoing restructuring processes, the group is struggling with rising costs and the implementation of enhanced flight safety measures.
