Singapore's state investor Temasek, which is the major shareholder of Singapore Airlines, expressed support for the airline's investments in Air India on Saturday. This support came amid increased scrutiny of Singapore Airlines' stake in the loss-making Indian carrier.
Reuters previously reported that Air India had sought approximately $1.5 billion in fresh equity capital from its owners, Tata Sons and Singapore Airlines. Currently, Singapore Airlines holds a 25.1% stake in India's second-largest airline, with the remainder owned by Tata.
The news of the funding request prompted Kenneth Tiong, a legislator from Singapore's opposition Workers' Party, to call for Temasek's funds not to be used to support the Indian carrier.
Furthermore, Singapore's Business Times published a commentary suggesting that Singapore Airlines is unlikely to exit its stake in Air India, as Tata is the only likely buyer. The commentary questioned the value of holding 25.1% beyond a board seat and share of losses, although the strategic viability of the investment remained.
In response to this commentary, Juliet Theo, co-head of portfolio development at Temasek Singapore, stated in a letter to the newspaper that Temasek views Singapore Airlines' decision to invest in Air India from a long-term perspective and supports it.
The letter also noted that the transformation of Air India involves complex, multi-year operational and integration challenges, the outcomes of which are determined by industry changes and external factors such as airspace disruptions, geopolitical events, and fuel price volatility. It was emphasized that 'efforts of this scale require time and are not expected to be linear.'
Nevertheless, Temasek did not provide a response regarding whether it would support any capital injection from Singapore Airlines into Air India.
Air India's large-scale reorganization has been ongoing since Tata took control of the formerly state-owned airline in 2022. Air India has faced a ban on flights by Pakistan for Indian carriers, disruptions due to the US-Iran war, and the aftermath of last year's aviation disaster that claimed 260 lives.
In the year ending March, the airline and its budget subsidiary Air India Express reported cumulative losses of $2.33 billion, negatively impacting Singapore Airlines' profits. On Thursday, Singapore Airlines announced that its board of directors would carefully review any requests for additional capital from Air India, taking into account other group capital needs and Air India's business strategy.