Air India reported a FY26 loss above INR220bn, equivalent to roughly S$3.0bn, materially wider than earlier expectations and signalling a sharper deterioration in operating performance.
The scale of losses reflects multiple overlapping pressures, including higher operating costs from airspace disruptions, reduced international capacity following the Boeing 787 incident, and continued strain from the Middle East conflict.
Middle East exposure and weaker pricing power limit recovery, increasing risk of sustained losses at Air India
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At the same time, Air India is undertaking an aggressive fleet renewal, with an order backlog of around 540 aircraft across Airbus and Boeing. This capex is central to its long-term transformation, but also implies significant funding requirements alongside ongoing operating losses.
Our view
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Given the magnitude of losses and continued operating pressure, the capital required in this round is likely to be meaningfully higher than initially expected.
SIA contribution for this round likely higher than initial expectations, increasing risk to dividend capacity.
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Above is an excerpt from a report by DBS Group Research. Clients of DBS may access the full PDF report @ https://www.dbs.com/insightsdirect/.
