Singapore Airlines Wants More Say In Air India Before Fresh Funding: Sources

Singapore Airlines is expected to seek greater influence over Air India’s management and stronger governance rights before approving a fresh capital injection into the Indian carrier, two people familiar with the matter said.

The proposed conditions, which would be negotiated with Air India’s majority owner Tata Sons, could include greater voting power on the board and requirements for the Indian airline to narrow its losses. Reuters reported last month that Air India was seeking about $1.5 billion in fresh equity from its owners.

Two other people familiar with the matter said Tata had approved a $1.1 billion infusion, representing its pro-rata share, while Singapore Airlines holds the remaining 25.1% stake in Air India.

All four people declined to be identified as the information is not yet public.

Singapore Airlines said its board would carefully evaluate any request for additional capital, taking into account Air India’s business strategy, the group’s operating cash flow and its other capital requirements.

Temasek declined to comment on "speculation with respect to ​the points on Temasek."

Tata and Air India did not respond to requests for comment.

SIA Seeks More Influence

The push for tougher terms comes as Singapore Airlines faces growing pressure to justify increasing its investment in Air India. The Indian carrier posted a $2.33 billion loss in the financial year ended March, weighing directly on Singapore Airlines’ profits.

Singapore Airlines has lost money in several past overseas investments, while Tata said in July that Air India’s turnaround could take up to a decade. Air India has also appointed former Ethopian Airlines head Tewolde Gebremariam as its new CEO, replacing former Singapore Airlines executive Campbell Wilson.

According to Reuters, Singapore Airlines currently has limited formal influence over Air India. Under a 2022 merger agreement that folded its 49%-owned Indian carrier Vistara into Air India, Singapore Airlines received a single board seat, which was taken up by its CEO Goh Choon Phong.

Its stake of more than 25% does, however, give Singapore Airlines the power under Indian company law to block special resolutions covering major corporate matters, including mergers, share buybacks and voluntary winding up.

Temasek To Stay Out Of Funding Decision

Air India’s funding request has also triggered political debate in Singapore. An opposition lawmaker in the country called for Temasek’s funds not to be used to support the Indian airline.

Singapore Airlines said on Tuesday that its investments in India have been and will continue to be funded by its internal resources. It said it had S$10.48 billion ($8.29 billion) in cash reserves and S$3.24 billion in undrawn credit lines as of the end of June.

Temasek, Singapore Airlines’ majority shareholder, would neither provide the capital itself nor intervene in the carrier’s decisions concerning Air India, the people said.

Temasek last month publicly backed Singapore Airlines’ investment in the Indian carrier, saying it took a long-term view of the decision. Singapore’s Senior Minister K. Shanmugam said on Saturday that any decision to invest in Air India lay with Singapore Airlines, and that Temasek expected the airline to make investment decisions responsibly.

Reuters reported that one of the people familiar with the matter said the onus for setting safeguards, governance expectations and performance targets for any additional investment in Air India lies with Singapore Airlines, not Temasek.

The person said Singapore Airlines’ strategy is to benefit from India’s long-term aviation growth while managing the risks of a major airline turnaround. Temasek has backed similar bets on Indian companies in the past, including hospital operator Manipal Health.

Temasek has built up significant exposure to India across sectors including healthcare, financial services, consumer and technology, and has cited the country as a key growth market in its portfolio.

($1 = 1.2645 Singapore dollars)