Air India's ₹10,000 crore fundraise plan draws cashflow concerns

Mumbai: Air India is seeking about ₹10,000 crore in fresh loans from banks to fund fleet expansion, aircraft refurbishment and operating expenses, even as some lenders are reluctant to extend new credit to the loss-making airline due to limited visibility on its cash flows, people familiar with the matter said.

The hesitation comes despite the Tata Group-promoted airline's AAA credit rating.

Also Read: Air India's new chief sets sights on higher revenue and cost curbs at first town hall


Some private sector banks have sought greater clarity on Air India's cash flows and turnaround plans before extending new loans, the people cited above said. State-owned banks are, however, willing to renew existing credit lines because of their relationship with the Tata Group and Air India's high credit score that signals lowest risk, they added.

Tata Group declined to comment. A senior group official said the conglomerate has never faced difficulty raising funds for any of its companies, including Air India, because of the strength of the Tata brand.

An official close to the matter said, "All new businesses, especially aviation, have a gestation period to become profitable and are not in any unusual situation regarding profitability. There are ongoing discussions on lending rates and the airline has already secured a sizeable loan from a leading bank."

Air India's consolidated loss more than doubled to ₹22,238 crore in the financial year ended March 2026 from ₹10,858 crore a year earlier. The deterioration was partly due to foreign-exchange losses, which rose to ₹7,388 crore in FY26 from ₹1,545 crore in FY25.

One source of comfort for lenders is an assurance that Tata Sons will continue to hold at least a 51% stake in the airline. However, lenders are worried that loan repayment could depend on continued equity infusions by the promoter. Tata Sons owns 74.9% of Air India, while Singapore Airlines holds the remaining 25.1%.

In June, the Tata Sons board approved a fresh capital infusion of more than ₹10,000 crore into Air India, its largest investment in the airline since committing ₹18,000 crore to acquire the company in 2021. Lenders are also seeking greater clarity on the continuation of N Chandrasekaran as the chairman of Tata Sons. Chandrasekaran is also the chairman of Air India's board.

Also Read: Air India to resume Delhi-Tel Aviv direct flights from December 1, restoring India-Israel air link

The airline has outstanding debt facilities of nearly ₹40,000 crore. State Bank of India is its largest lender, followed by Bank of Baroda and Punjab National Bank, according to disclosures by rating agency Crisil at the end of May.

Air India is of strategic importance to the Tata Group. The airline was acquired from the government through the group's wholly owned subsidiary Talace Pvt Ltd as part of the government's disinvestment programme. The acquisition has made the Tata Group India's second-largest aviation player after IndiGo.