Air India’s new chief executive, Tewolde Gebremariam, takes charge at a moment when the airline’s transformation has become inseparable from a larger question: how much capital, time and infrastructure does it take to rebuild a national aviation network? The former Ethiopian Airlines chief inherits an airline that is investing in aircraft, cabins, technology, people and operating systems while its losses have more than doubled and its operating cash flow has turned negative.
The immediate financial issue is a proposed equity infusion of around $1.5 billion from shareholders Tata Sons and Singapore Airlines. But the significance of that requirement extends beyond the size of the cheque. Air India is not simply financing a bad year or plugging a temporary revenue gap. It is attempting to replace an ageing fleet, restore service standards, expand domestic and international networks, integrate businesses and build the technical and organisational capacity needed to operate a much larger airline.
That makes the carrier’s turnaround an infrastructure problem as much as a corporate one. Aircraft are only the most visible part of an airline system. They require pilots, cabin crew, engineers, maintenance facilities, training institutions, digital platforms, airport slots, ground-handling capacity and a network capable of deploying new capacity profitably. Each layer must develop alongside the others. Spending on one component without the rest can leave the airline with assets it cannot use efficiently.
Gebremariam’s appointment reflects this operational challenge. Air India said his previous experience included airline transformation, operational excellence, safety and profitable expansion. At Ethiopian Airlines, where he served as chief executive for more than a decade, he oversaw the expansion of the fleet, network and aviation infrastructure and helped develop Addis Ababa as a major African hub. The comparison is relevant, but India presents a different scale and institutional context. Air India is rebuilding after years of state ownership while also responding to a highly competitive domestic market and a global aviation supply chain under pressure.
The financial figures reported by Moneycontrol show why the new management’s mandate is unusually demanding. Air India Group, comprising Air India and Air India Express, recorded a combined net loss of Rs 22,238 crore in FY26, compared with Rs 10,859 crore in the previous year. Revenue declined from Rs 76,754 crore to Rs 70,086 crore. Operating cash flow moved from a positive Rs 5,447 crore to a negative Rs 1,790 crore, a deterioration of more than Rs 7,200 crore in one year.
On a simple operating basis, the negative cash flow amounts to nearly Rs 5 crore a day. Yet that calculation understates the funding requirement because the airline must spend while it is losing money. Its narrow-body refurbishment programme has been completed, but the wide-body programme is expected to continue until the end of FY28. At the same time, the group is upgrading technology and operational systems, expanding its workforce and preparing for hundreds of aircraft expected from Airbus and Boeing.
The balance sheet shows the accumulated effect of that pressure. Air India’s reserves deteriorated to negative Rs 33,147 crore at the end of FY26 from negative Rs 18,070 crore a year earlier. Total liabilities increased to Rs 1,10,452 crore from Rs 94,005 crore. The company also ended the year with only a marginal Rs 119 crore increase in cash and cash equivalents, despite Rs 2,532 crore provided through cash-flow activities.
These numbers do not establish that the transformation is failing. They show that the airline is in the expensive middle phase of a restructuring: the old operating model has not yet been fully replaced, while the benefits of new investment have not yet appeared at sufficient scale. Aircraft refurbishment, training and technology upgrades can improve reliability and customer experience, but they require cash before they generate measurable gains in revenue or operating efficiency.
The fleet programme illustrates the sequencing problem. New aircraft can reduce the operational limitations of an ageing fleet and support better reliability, passenger experience and network growth. But each delivery creates additional requirements. The airline needs financing for the aircraft, trained pilots and cabin crew, engineers and maintenance capability. It also needs routes and schedules that can generate enough demand and revenue to justify the additional capacity.
This is why fleet renewal cannot be evaluated only through the number of aircraft ordered or delivered. The infrastructure surrounding those aircraft determines whether they become productive assets or add to the cost base. A larger fleet requires a larger operational system, including technical facilities, training capacity, airport coordination and digital systems. If those systems lag, the airline may carry the cost of expansion without receiving its full commercial benefit.
The group’s customer-facing improvements provide one indication that the transformation is producing some visible results. Air India has completed refurbishment of its narrow-body aircraft used on domestic routes, and its Net Promoter Score has improved. But those gains sit alongside a wide-body refurbishment programme extending through FY28, continuing technology work and the more difficult task of integrating operations and businesses across the group.
The airline is also exposed to factors outside management control. The FY26 results were affected by airspace closures, higher fuel prices linked to the West Asia conflict, foreign-exchange movements and the crash of AI171. Aircraft and component supply-chain constraints have further complicated fleet and maintenance planning. These events do not remove the need for operational improvement, but they make it harder to distinguish the performance of the transformation from the effect of external shocks.
Tata Sons Chairman N Chandrasekaran has described Air India’s transformation as a five-to-ten-year journey. That timeframe is important because it changes the way the proposed $1.5 billion should be understood. If the objective were only to finance short-term losses, the amount could be assessed against the reported operating cash burn. But the stated programme also includes aircraft, cabins, technology, employees and technical capabilities. The funding must therefore support both the existing airline and the future airline being built.
The ownership structure adds another layer of scrutiny. Singapore Airlines holds 25.1 percent of Air India following the merger of Vistara with the carrier, while Tata Sons remains the principal shareholder. In Singapore, questions have been raised about SIA’s exposure and whether future capital requirements could affect its wider financial position. Singapore Transport Minister Jeffrey Siow said SIA had not sought additional capital from shareholders to fund its investments in India and that the investment was being financed through its own balance sheet and earnings.
Siow also distinguished between SIA’s commercial investment and Singapore government finances. Temasek, SIA’s controlling shareholder, supported the strategic rationale for the investment while acknowledging that Air India’s transformation involved complex, multi-year operational and integration challenges. SIA and Temasek have not indicated an intention to retreat from the investment, while both Tata Sons and SIA did not respond to questionnaires seeking comments for the Moneycontrol report.
For the shareholders, the central measure will not be whether Air India spends heavily during the transformation. Significant spending is already part of the plan. The more consequential question is whether each round of capital produces a visible improvement in operating performance, reliability, customer service and cash generation. A long restructuring can be justified if the airline steadily reduces its dependence on shareholder funding. Repeated capital calls without a corresponding improvement in the operating model would create a different challenge.
That is also the key urban and infrastructure question. India’s aviation growth depends not only on passenger demand but on whether airlines, airports, maintenance networks, training systems and supporting institutions can expand together. A national carrier with a stronger fleet and wider network could connect cities to international markets and support the development of aviation hubs. But the economic value of that network depends on the financial sustainability of the airline operating it.
Air India’s next phase will therefore test whether a large legacy carrier can rebuild itself while continuing to serve a growing and increasingly competitive market. The available evidence confirms the scale of the investment and the deterioration in recent financial performance. It does not yet establish how quickly losses will narrow or when operating cash flow will recover. The milestones to watch are the implementation of the proposed equity infusion, progress on wide-body refurbishment, aircraft deliveries, workforce and technical-capability growth, operating reliability and the group’s ability to reduce cash burn over time.
