Tata Sons may pump more money into Air India
What's the story
Tata Sons, the holding company of the Tata Group, may consider investing more money into its airline subsidiary, Air India. This was hinted at by N Chandrasekaran, Chairman of Tata Sons. He said that "if there is a requirement for it, we can look into it," while attending a JRD Tata Memorial Trust event celebrating Tata's 121st birth anniversary.
Funding requirements
Air India's financial needs and past investments
Air India is said to be looking for funds worth up to ₹10,000 crore from its promoters, Tata Sons and Singapore Airlines. The money would be used for ongoing upgrades. In FY25, both stakeholders had invested a little over ₹9,500 crore in the airline. Chandrasekaran didn't confirm if Air India had approached its parent company for funds or not.
Industry hurdles
Challenges faced by the aviation sector
Chandrasekaran highlighted that the aviation sector is going through tough times due to global supply chain disruptions, geopolitical tensions, capital churn, and fuel costs. He said these issues have made the availability of parts, infrastructure, and new fleets unpredictable. "Every plan that you have is becoming difficult due to situations faced in this area," he added.
Business dynamics
Aviation business and fuel price challenges
Chandrasekaran also noted that the aviation business works on "very thin margins" and has a complicated relationship with oil prices. He said, "You put capital you need to produce returns. And only then you can put fresh capital." This cycle of investment and return generation is crucial for sustaining operations in this sector.
Financial struggles
Air India's financial performance and geopolitical challenges
Since its acquisition by the Tata Group in 2021, Air India has been struggling with heavy losses and poor cabin service quality. In FY25, the airline posted a consolidated net loss of ₹10,859 crore on revenue of ₹78,636 crore. Chandrasekaran acknowledged that geopolitical tensions leading to airspace closures and route diversions are beyond their control but have a significant impact on operations.