Air India’s $1.6 Billion Loss and Tata’s Turnaround Plan
Air India is projected to report a significant loss of $1.6 billion for the financial year ending March 2024, a major setback attributed to the grounding of aircraft after the Ahmedabad crash in October 2023, according to rating agency ICRA.
Key Takeaways
- Projected Loss: $1.6 billion for FY2024, up from $1.1 billion in FY2023.
- Primary Cause: Financial impact from aircraft groundings post-Ahmedabad crash.
- Turnaround Target: A return to profitability with a projected $200 million profit in FY2025.
- Parent Support: Tata Sons is investing $2 billion over five years.
- Fleet Expansion: 30 new aircraft (20 narrow-body, 10 wide-body) planned for induction.
ICRA’s Assessment and Quotes
“The grounding of aircraft following the Ahmedabad plane crash in October 2023 is likely to have a significant impact on Air India’s financial performance in FY2024,” ICRA said in its report.
“The airline is expected to post a loss of $1.6 billion in FY2024, compared with a loss of $1.1 billion in FY2023,” it added.
The agency confirmed that the airline’s ambitious turnaround strategy is expected to reverse fortunes by FY2025.
“The airline is expected to post a profit of $200 million in FY2025,” ICRA said.
The Turnaround Strategy
The revival plan is backed by a substantial $2 billion investment from parent company over the next five years. A core component is fleet modernization, with 30 new aircraft slated for induction this year.
Network expansion is also a priority, targeting new long-haul routes to the US, Europe, and Australia, alongside increased frequency on existing corridors.
Challenges and Outlook
While ICRA labels the plan “ambitious” but “achievable,” citing Air India’s strong brand and extensive network, it underscores the critical need for effective execution.
“The airline has a strong brand and a large network, which will help it in its turnaround,” the rating agency said.
“However, the airline will need to execute its plan effectively to achieve its goals,” it added.
The coming year will be crucial for Air India as it navigates financial recovery and implements its strategic overhaul under Tata ownership.
