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Sources say RPT-Air India is seeking $1.5 billion in compensation from Tata and Singapore Air, as its losses continue to mount.

Air India wants 'about $1.5 billion of fresh equity from its owners Tata Sons & Singapore Airlines. This comes months after Air India posted a record-breaking annual loss.

This would be the largest request for funding from Air India made public since Tata acquired control of the former government-owned carrier in 2020. The letter highlights the challenges that the airline faces as it undergoes a multibillion-dollar overhaul, including refurbishment of the existing fleet.

In the fiscal year ending March, the carrier and Air India Express' budget unit posted combined losses of 2,33 billion dollars. This is more than twice the losses from the previous year. Singapore Airlines has also suffered from the losses.

Air India is looking for the money immediately. However, the infusion will likely happen in several tranches. Singapore Airlines will need to pay its share of the infusion to make the investment happen, according to one source.

The two people stated that the company is looking for funding in the form of new equity. The two people said that discussions are still ongoing and there has not been a decision made on the request. They declined to be identified as they weren't authorised to speak publicly about the matter.

Air India and Tata Sons have not responded to any requests for comments.

Singapore Airlines, who owns about 25% of Air India said that it worked closely with Tata Sons in order to support Air India’s transformation programme but refused to comment on its finances.

AIR INDIA'S TURNAROUND EFFORT

Air India was also affected by the ban on Indian carriers flying in Pakistani airspace, the disruptions caused to its international network due to the U.S./Israeli war against Iran, and the fallout from a fatal crash that occurred last year.

Tata Sons Chairman N. Chandrasekaran is preparing to step down from his position in February after months of disagreements with the group's charitable trust over Air India's losses.

Chandrasekaran said that Air India's turnaround may take up to 10 years. He cited the persistent disruptions in the supply chain and the need for the airline to revamp its legacy systems, culture, and fleet.

Air India is delaying the delivery of hundreds of aircraft ordered from Airbus and Boeing, as Tata pressures it to reduce costs and record losses.

One of the sources said that Air India would continue to require capital infusions over the next few years. (Reporting and editing by Emelia Sithole Matarise; Abhijith Kalra, Aditya Kahlra)

(source: Reuters)