Air India is looking to raise ₹10,000 crore for fleet expansion, but private lenders are showing caution due to widening losses. While the airline retains Tata Group support, financial strain and high existing debt have led banks to demand greater clarity on cash flows.
Air India is working to secure ₹10,000 crore in fresh debt to fund aircraft refurbishment, fleet expansion, and daily operations. However, the plan is facing resistance from several private sector lenders, who are exercising caution despite the airline’s high credit rating. The hesitation among these banks stems from the airline's recent financial results and the pressure it faces to manage a large debt pile.
For the financial year ending March 2026, Air India’s consolidated losses jumped to ₹22,238 crore, more than double the ₹10,858 crore reported in the previous year. A significant factor behind this surge was a sharp increase in foreign-exchange losses, which rose to ₹7,388 crore from ₹1,545 crore in FY25. With existing debt facilities already totaling nearly ₹40,000 crore, banks are conducting rigorous due diligence before committing additional capital, specifically looking for stronger visibility on operational cash flows.
The approach to the loan request varies across the banking sector. Private lenders are pushing for more transparency regarding how the airline plans to generate cash to service this debt. In contrast, state-owned banks appear more receptive to renewing existing credit lines, often citing their long-standing relationship with the Tata Group as a basis for their comfort.
Support from the promoter remains the central pillar of confidence for creditors. Tata Sons currently holds a 74.9% stake in the airline, with Singapore Airlines holding the remaining 25.1%. To bolster the balance sheet, the Tata board approved a capital infusion of over ₹10,000 crore in June 2026. The promoter has also committed to maintaining a stake of at least 51%. The aviation industry is currently in a capital-intensive phase, meaning that consistent access to funds is critical for growth.
Looking ahead, the airline's ability to navigate this period will depend on managing its operational costs and proving that it can generate sufficient cash to meet its obligations. Stakeholders and lenders will likely monitor future capital needs, specifically whether the company requires further equity support from the Tata Group or if it can successfully improve its internal cash generation to stabilize its financial position.