Temasek backs SIA’s long-term Air India strategy amid scrutiny over investment
Temasek has reiterated its support for Singapore Airlines’ (SIA) long-term strategy as questions grow over the viability of the carrier’s investment in Air India.
The Singaporean investment company, which is SIA’s majority shareholder, issued its position after Air India reported a loss of around S$3.2 billion. SIA currently owns a 25.1 per cent minority stake in the Indian airline.
The financial setback has prompted renewed scrutiny over whether SIA should continue putting money into Air India, particularly as the wider Air India Group seeks fresh funding.
Air India seeks fresh equity
The Air India Group is reportedly seeking close to S$1.9 billion in fresh equity from its shareholders, Tata Sons and SIA. SIA is expected to contribute approximately S$500 million if the funding exercise proceeds.
The potential capital injection has attracted attention in Singapore, with questions raised over whether SIA’s shareholders should continue supporting the investment.
Workers’ Party MP Kenneth Tiong previously said he intended to raise the matter in Parliament. He also argued that Temasek funds should not be used to support Air India and that SIA should bear the responsibility if it chose to continue with the investment.
The debate intensified after The Business Times published an editorial questioning whether SIA should cut its losses and exit the investment.
Temasek says India could provide a second hub
Responding to the concerns, Temasek said it supported SIA’s long-term strategy and pointed to the airline’s track record of navigating difficult periods and positioning itself for future growth.
Juliet Teo, Temasek’s joint head of portfolio development and head of ecosystem development, said SIA had identified the development of a second hub as part of its strategy to secure growth beyond Singapore.
India is considered a significant opportunity because it is one of the world’s largest air transport markets and has strong potential as an aviation hub.
SIA has already maintained a presence in India for many years. The airline previously invested in Vistara, beginning in 2013, before Vistara was eventually merged with Air India.
Temasek said SIA’s Air India investment allows the Singapore carrier to deepen its involvement in India’s growing aviation market.
Investment faces multiple challenges
Temasek acknowledged that transforming Air India would be a complicated, multi-year process involving significant operational and integration challenges.
It also stressed that such a transformation would take time and would not necessarily progress in a straight line.
The aviation industry faces several external risks, including aircraft delivery and fleet renewal cycles, airspace disruptions, geopolitical tensions and fluctuations in fuel prices. These factors can have a significant impact on airline profitability and operating costs.
Recent geopolitical developments have added further uncertainty for airlines operating in the region, with airspace restrictions and higher energy costs affecting carriers.
Despite the concerns surrounding Air India’s financial performance, Temasek said it views SIA’s investment from a long-term perspective and remains supportive of the strategy.
SIA, meanwhile, has said its board would carefully consider any request for additional capital from Air India. Temasek’s latest statement did not confirm whether it would support a specific future capital contribution by SIA.
For now, the debate highlights the balance SIA must strike between its long-term expansion ambitions in one of the world’s fastest-growing aviation markets and the financial risks associated with supporting Air India’s transformation.