Air India Loses Over $2 Billion As Iran War And Pakistan Airspace Ban Hit Operations

Air India has posted a record annual loss of more than $2 billion for the financial year 2025-26, according to shareholder Singapore Airlines, as the airline struggled with disruptions caused by the Iran conflict and Pakistan’s continued ban on Indian carriers using its airspace. The massive loss marks another setback for the Tata Group-owned carrier, which has been trying to rebuild and expand its international operations after years of restructuring challenges. According to Singapore Airlines’ annual report released on Thursday, the Air India Group recorded losses worth 3.56 billion Singapore dollars during the 12 months ending March 2026.

At current exchange rates, the losses amount to nearly $2.80 billion. Singapore Airlines, which owns a 25 per cent stake in Air India, did not specify the exchange rate used in the report. Reuters had earlier reported that Air India was expected to report an annual loss of around $2.12 billion.

Global disruptions and airspace restrictions hit operations hard

Air India, which is not listed on Indian stock exchanges and has not yet officially filed its financial earnings with Indian regulators, declined to comment on the reported figures. The airline had reported a much smaller loss of 39.75 billion Indian rupees, or around $415 million, during the previous financial year of 2024-25.

The sharp rise in losses comes at a time when the airline has been forced to reduce several international flights over recent months. Industry experts say the disruptions linked to geopolitical tensions in West Asia and restricted air routes have heavily affected Air India’s operational costs and schedules. The reduction in flights has also slowed down the airline’s long-term turnaround and expansion plans.

Foreign airlines gain as Air India cuts international services

The airline’s reduced international presence has reportedly benefited foreign carriers operating in India’s growing aviation market. Reuters reported that airline groups such as Lufthansa Group and Cathay Pacific have added more services to India as Air India scaled back some routes.

Singapore Airlines also revealed that its own earnings were impacted because of Air India’s financial troubles. The airline group said its net profit for FY2025/26 dropped sharply despite strong revenue growth and improved operating profits. According to its audited financial results, Singapore Airlines’ net profit declined 57.4 per cent year-on-year to 1.184 billion Singapore Dollars, or around USD 932 million.

Singapore Airlines says Air India losses dragged earnings down

At the same time, Singapore Airlines said its operating profit increased 39 per cent to 2.375 billion Singapore Dollars, or around USD 1.87 billion. Revenue also rose 5 per cent to a record 20.522 billion Singapore Dollars, equivalent to around USD 16.16 billion, during the financial year ending March 31, 2026. “The swing from a share of profits of associated companies last year to a loss this year (-$846 million) was due to the Group accounting for its share of Air India’s full year losses, versus only four months the previous year,” the release said.

The airline also added that lower profits were partly linked to the absence of the “$1,098 million non-cash accounting gain recognised in November 2024 upon the completion of the Air India-Vistara merger.”

Airline reaffirms long-term commitment despite record losses

Despite the massive financial setback, Singapore Airlines said it remains committed to its investment in Air India. “The Company is committed to its 25.1% investment in the Air India Group, which is a core component of its long-term multi-hub strategy,” the release said.

The statement signals that Singapore Airlines still sees long-term value in India’s aviation market despite Air India’s current operational and financial struggles.

(With inputs from agencies)

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