NEW DELHI: Temasek, the majority shareholder of Singapore Airlines (SIA), on Saturday (Aug 29) backed the airline’s investment in Air India, as scrutiny grows over its stake in the loss-making Indian carrier.
Air India’s request for about US$1.5 billion in fresh equity from owners Tata Sons and SIA was first reported by Reuters this week. SIA owns 25.1 per cent of India’s second-largest airline, with the rest owned by Tata.
News of the funding request prompted Mr Kenneth Tiong, a lawmaker from Singapore’s opposition Workers’ Party, to urge that Temasek’s funds not be used to shore up the Indian carrier.
Singapore’s Business Times also ran a commentary arguing that SIA could not realistically exit its Air India stake, with Tata the only plausible buyer.
It questioned what its 25.1 per cent holding offered beyond a board seat and a share of the losses, while saying the strategic logic of the investment still held.
In a letter to the newspaper responding to that commentary, Juliet Teo, joint head of portfolio development at Temasek Singapore, said Temasek viewed SIA’s decision to invest in Air India from a long-term perspective and was supportive of it.
The letter said the transformation of Air India involved complex, multi-year operational and integration challenges, with outcomes shaped by industry developments and external factors such as airspace disruptions, geopolitical developments and fuel price volatility.
“Efforts of this scale take time and are not expected to be linear,” it said.
Temasek did not address whether it would support any capital contribution by SIA to Air India.
Air India’s multibillion-dollar revamp has been under way since Tata took control of the former state-owned carrier in 2022.
Air India has been hit by Pakistan’s airspace ban on Indian carriers, disruptions from the US-Israeli war with Iran and the fallout from a crash last year that killed 260 people.
In the year to March, the airline and its budget unit Air India Express posted combined losses of US$2.33 billion, weighing on SIA’s profits.
SIA said on Thursday its board would 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.
