Air India funding hinges on strategy: Singapore Airlines

NEW DELHI: Singapore Airlines on Thursday said its board will carefully consider Air India’s any requests for additional capital after taking into consideration the group’s other capital requirements as well as the Indian carrier’s business strategy.

The comments from Singapore Airlines come against the backdrop of the loss-making Air India seeking additional funds of $1.5 billion from its co-owners -- Tata Sons and Singapore Airlines. Besides, a Singapore Parliamentarian has raised concerns about Singapore Airlines providing more funding for Air India.

In Air India, which was acquired by the Tata Group in January 2022, Singapore Airlines currently holds a 25.1% stake.

Singapore Airlines (SIA) said as a significant minority shareholder, it works with Tata Sons to support Air India’s transformation programme.

“SIA’s board will carefully consider any requests for additional capital from Air India, taking into consideration the Group’s other capital requirements and Air India’s business strategy,” an SIA spokesperson said in a statement.

According to the spokesperson, SIA Group’s capital allocation follows a disciplined evaluation process that considers its operating cash flow, investment requirements in new aircraft and products, as well as multi-hub investments such as Air India, to support sustainable long-term growth and returns.

In a social media post this week, Singapore’s Member of Parliament Kenneth Tiong Boon Kiat cited a media report and flagged concerns about Singapore Airlines investing more in Air India.

“Air India has asked its owners for another $1.5 billion. Singapore Airlines owns about a quarter of it, and Temasek owns most of Singapore Airlines, so this is not only a question for private shareholders. Whichever of the two writes the cheque, it will have a significant impact on Temasek,” he said in a Facebook post. Temasek is the sovereign wealth fund of Singapore.

According to Kenneth Tiong Boon Kiat, Tata Sons’ chairman has said the turnaround could take up to a decade, and one of the sources in the report expects the capital calls to keep coming for years yet.

“That same chairman steps down in February, after disagreements the report links partly to Air India’s losses. SIA went into the red last quarter despite record revenue.

“No one, least of all Singaporeans, owes Air India a living. I will not support, nor expect, any future use of Temasek’s funds to prop up Air India via Singapore

The loss-making Air India has been seeking $1.5 bn additional funds from co-owners Tata Sons, Singapore Airlines.

If Singapore Airlines wants to continue its bet on Air India, it should do so on its own two feet, and not on Temasek’s,” he said.

Kenneth Tiong Boon Kiat said he has also filed a question for oral answer from Singapore’s Minister of Transport whether these losses have been assessed against SIA’s capacity to provide essential transport services, and whether they engage the notification duty that comes with SIA’s designated status under the Civil Aviation Authority of Singapore Act. The question is scheduled to be taken up during the Parliament’s sitting on September 8.

There was no comments from Air India regarding the funding requirement as well as the concerns raised by the Singapore Parliamentarian.

Sources said Air India is planning to seek additional funds to the tune of $1.5 billion, which is over Rs 14,000 crore at the current exchange rate.