Air India Express Reports FY26 Net Loss of ₹6,748 Crore, Attributes Setback to Forex Volatility

Air India Express has classified its weak financial performance in FY26 as a 'one off' event, expressing optimism for recovery through targeted cost optimization, network adjustments, and revenue enhancement measures.

According to the airline's annual report, its net loss expanded by 15 per cent year-on-year to reach ₹6,748 crore for FY26, which eroded its net worth. The wider net loss occurred despite a 20 per cent growth in revenue, which climbed to ₹19,391 crore. The financial strain was primarily driven by a foreign exchange loss of ₹2,370 crore.

The airline’s board cited multiple external and operational challenges, including geopolitical disruptions and forex volatility, as the causes for the adverse performance. In response, management has formulated a detailed recovery plan with sensitivity analysis. This plan incorporates fleet expansion, cash flow projections, and funding availability alongside remedial measures such as cost rationalization and network optimization.

The recovery framework also factors in continued financial support from lenders and shareholders, which includes the renewal of existing facilities and access to additional funding. Sole shareholder Air India previously infused ₹2,000 crore into the airline via a rights issue in June. Any future funding from Air India will depend on its capacity to secure additional capital from promoters Tata Sons and Singapore Airlines. While a Singaporean lawmaker has raised concerns regarding the broader context, Temasek, a principal shareholder in Singapore Airlines, has expressed support for the airline's long-term strategy.

On the operational front, Air India Express reported positive momentum in its annual report. Total passengers flown grew by 27 per cent to 26 million, while the number of destinations increased by nine to reach 63. The airline also undertook initiatives to strengthen its brand, enhance customer experience, and accelerate digital transformation.

A spokesperson for Air India Express noted that excluding the impact of foreign exchange, the airline's underlying performance showed year-on-year improvement. Total revenue increased by 19 per cent, and unit revenue improved by 6.5 per cent over the year. Backed by network strengthening, faster redelivery of older-generation aircraft, cost control measures, and merger synergies, unit costs—excluding forex and interest—decreased by 4 per cent.

Furthermore, the airline stated that the loss before tax, excluding foreign exchange, reduced to ₹3,771 crore in FY26 from ₹4,911 crore in FY25, despite external challenges and airspace closures. Losses in the second half of FY26 reportedly dropped by nearly 64 per cent compared to the corresponding period in FY25, reflecting operational progress despite broader market hurdles.

"This case highlights how external macroeconomic factors like foreign exchange volatility can heavily impact the bottom line, even when core operational metrics and passenger volumes are growing. For businesses navigating high-capital sectors, building robust financial buffers and executing disciplined cost rationalization are critical steps to weather unexpected shocks and protect net worth during downturns." — Dr. Shishir Gupta, Founder & CEO, StartupLanes