NEW DELHI: Air India is expected to record a loss of around $1.6 billion for the financial year ending March 2026, following the combined impact of a fatal aircraft crash and Pakistan’s continued closure of its airspace to Indian airlines, according to people familiar with the matter.
The projected loss marks the airline’s worst annual performance since its acquisition by the Tata Group, interrupting earlier signs of financial stabilisation.
Industry sources said the setback followed a Boeing 787 Dreamliner crash in 2025, which triggered operational disruptions, additional safety compliance costs and higher insurance premiums.
At the same time, Pakistan’s airspace restrictions forced Air India to reroute multiple international flights, particularly to Europe and North America. The longer flight paths significantly increased fuel consumption, crew duty hours and aircraft utilisation costs, placing sustained pressure on margins.
Despite stable passenger demand, rising operating expenses offset revenue gains, delaying progress in the airline’s turnaround plan.
Air India, jointly owned by Tata Group and Singapore Airlines, has been pursuing an ambitious fleet renewal and service expansion strategy. Executives have previously acknowledged that external shocks, including geopolitical disruptions, have slowed the recovery timeline.
Analysts say Air India’s financial outlook will depend on the duration of regional airspace restrictions and the airline’s ability to absorb higher operating costs while maintaining network stability.
The airline has not publicly released final loss figures but has confirmed that prolonged route diversions have materially affected performance.
