Tata Sons readies fresh ₹10,000 crore bet on Air India as losses mount, but T&C apply

Tata Sons’ board has approved in principle a fresh capital infusion of more than Rs 10,000 crore into Air India, one of its biggest commitments to the airline since the Tata Group acquired it for Rs 18,000 crore in 2021, as per a report by Reeba Zachariah of The Times of India.

The approval, however, comes with conditions. People familiar with the matter told TOI that any fresh funding will be released only after Air India and other Tata Group investee companies make a business case for the capital they seek.

“Any capital infusion will require Air India and other investee companies to present a business case when funding is sought,” one person told TOI.


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The decision was taken at a June meeting of the Tata Sons board chaired by N Chandrasekaran and attended by Tata Trusts chairman Noel Tata and vice-chairman Venu Srinivasan. Under Article 121A of Tata Sons’ articles of association, investments exceeding Rs 100 crore require majority backing from Tata Trusts’ nominee directors, according to people familiar with the matter.

The fresh approval comes more than a year after Tata Sons paused equity injections into Air India. The airline reported a loss of Rs 22,238 crore in FY26, more than double the previous year, while its funding requirements have risen as it works through a multi-year transformation programme.

Air India capital needs come under scrutiny

Air India’s financial performance has been a growing concern within Tata Sons. Earlier this year, Tata Trusts chairman Noel Tata raised questions over losses at Air India and sought greater clarity on the group’s strategy and capital allocation.

At a Tata Sons board meeting in May, Air India presented its performance and capital requirements, with Noel Tata calling for course correction on the airline and other loss-making new businesses, according to an Economic Times report.

Tata Sons’ FY26 report showed its investment in Air India at Rs 22,618 crore, unchanged from the previous year, indicating that no fresh equity had been injected during FY26. Air India has instead relied on borrowings and other financing, taking its outstanding debt to around Rs 40,000 crore across 11 lenders.

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State Bank of India has the largest exposure at about Rs 18,500 crore, followed by Bank of Baroda at Rs 5,938 crore.

Air India has also approached its shareholders for additional funding as the airline’s turnaround has proved more expensive and slower than initially expected.

Singapore Airlines faces its own funding decision

Singapore Airlines is also weighing whether to participate in the airline’s next capital raise. Air India had sought about $1.5 billion in fresh equity from its two shareholders, Tata Sons and SIA, as losses and the cost of its turnaround mounted.

SIA has said it will “carefully consider” any request for additional capital, taking into account the broader capital requirements of the group and Air India’s strategic direction. Its board, rather than management, retains the final say on any further investment.

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The decision has also drawn scrutiny in Singapore because SIA is majority-owned by state investment firm Temasek. Temasek has backed SIA’s investment in Air India as a long-term strategic bet, even as questions have been raised over continued funding for the loss-making carrier.

Tata Sons board to meet on September 17

The latest approval comes ahead of another Tata Sons board meeting scheduled for September 17. Tata Trusts, excluding Sir Ratan Tata Trust, is scheduled to meet on September 11.

Sir Ratan Tata Trust has been barred from holding board meetings since May pending an inquiry into alleged violations of the Maharashtra Public Trusts Act. People familiar with the matter said the restriction does not affect the voting rights of Tata Trusts’ nominee directors on the Tata Sons board.

The nominee directors, appointed under Article 104B, owe their primary fiduciary duty to Tata Sons, while their voting rights under Article 121A remain intact unless they resign or are formally removed, the people said.

Capital discipline at heart of Tata board tensions

The Air India funding decision also comes against the backdrop of differences between Noel Tata and Chandrasekaran over the performance of the group’s newer businesses and the allocation of capital.

Noel Tata had raised concerns over Air India and BigBasket and sought tighter capital discipline. The issue of Chandrasekaran’s reappointment as Tata Sons chairman was subsequently deferred, with discussions around the group’s strategy and the performance of its newer businesses forming part of the wider deliberations.

Chandrasekaran later announced that he would step down as Tata Sons chairman when his current term ends on February 20, 2027. The Tata Sons board is expected to begin the succession process at its September meeting.

Tata Sons owns 73.8% of Air India, while Singapore Airlines holds 24.7% and employees own about 1.5% through SBICAP Trustee Co. To maintain its stake and avoid dilution, Singapore Airlines would need to invest roughly Rs 3,350 crore ($351 million) if the entire proposed funding requirement is raised through equity.

Tata Sons and Tata Trusts declined to comment, TOI report said.

(With inputs from Times of India)