Air India (AI, Delhi International) wrote off approximately INR70 billion Indian rupees (USD853.2 million) in the 12 months to March 31, 2023, because of losses incurred at AirAsia India (Bengaluru International) and issues with older aircraft and engines, according to an Economic Times report.

Unnamed sources "aware of the matter" told the outlet that Air India will post a loss for the same 12-month period of just over INR25 billion (USD304.7 million). This compares favourably to the INR95.56 billion (USD1.2 billion) loss posted in the previous financial year.

"Air India, along with its subsidiary Air India Express (IX, Delhi International), was EBITDAR positive in FY23 and near breakeven after paying lease rentals in the first year, excluding AirAsia India, where most of the losses were recorded," one source said.

Tata Sons, which acquired Air India in early 2022, owned a 83.67% stake in AirAsia India for the majority of the 2022/23 fiscal year, before purchasing the remaining 16.33% shareholding from the AirAsia Aviation Group in November. Tata is to merge AirAsia India into Air India's low-cost subsidiary, Air India Express, and rename the airline AIX Connect (Bengaluru International).

AirAsia India is reported to have accounted for around INR15 billion (USD182.8 million) of Air India's impairment costs while old aircraft and engines at Air India accounted for another INR50 billion (USD609.5 million) in impairment costs. Since its acquisition by Tata Sons, Air India has embarked on a massive restructuring program, including a significant fleet renewal program. In February, the airline ordered 470 aircraft. The sources told the Economic Times that Air India was now profitable "at an operational level," excluding expenses such as taxes, rent, and restructuring costs.

"Many (older) aircraft will be auctioned off or junked, keeping the safety aspect as top priority," the source said. Sometimes, things may not be visible on the ground, but Air India is focused on modernising its aircraft and systems, and will make no compromises as far as safety is concerned, even as we cut costs through tech-led modernisation. The airline needed a lot of restructuring, and hence such a quantum of loss shows the plan is showing results."