Air India's financial woes continue to mount as its total losses, including write-offs on old aircraft and engines, are estimated to have reached a staggering ₹14,000 crore by the end of FY23. According to a report published by The Economic Times, Tata Sons, the new owner of Air India, invested approximately ₹13,000 crore in the struggling airline during FY23. This investment, however, excludes the committed funds for the purchase of 470 new airplanes.
The ET report, citing insider sources, revealed that the order value for the new aircraft is estimated at a substantial $30 billion. This significant investment will be paid in installments over the coming years.
In light of the financial challenges faced by Air India, Tata Sons Chairman N Chandrasekaran has emphasized that customer centricity and safety must take precedence over the pursuit of profit.
To aid its ambitious expansion plans, Air India recently finalized a deal with CFM International, a US-based engine manufacturer, to procure engines for a whopping 400 aircraft. The agreement, first announced in February, will see CFM's LEAP engines powering the airline's new fleet of 210 Airbus A320neo/A321neos and 190 Boeing 737 MAX family aircraft. Additionally, the two companies signed a comprehensive multi-year services agreement covering the entire LEAP engine fleet of the airline.
Air India's collaboration with CFM International dates back to 2002 when the airline began operating Airbus A320ceo aircraft powered by CFM56-5B engines. In 2017, Air India became the first operator in India to use LEAP-1A engines, starting with A320neos. Presently, the airline operates 27 LEAP-1A-powered A320neo family aircraft.
The Tata Group's acquisition of a 100% stake in Air India and Air India Express was finalized under the strategic divestment program led by the Indian government in January 2022.
Undeterred by its current challenges, Air India is charting a transformational course called Vihaan.AI, aiming to triple its fleet size and capture 30% of both the domestic and international market shares within the next five years.
Despite the losses, Air India and Tata Sons are striving to turn the tide and position the airline as a formidable player in the fiercely competitive aviation industry. The collaboration with CFM International and the ambitious expansion plans underscore their determination to soar above adversity and secure a brighter future for the iconic Indian carrier.
Also Watch: Air India, CFM finalise order for engines for 400 planes