Temasek Backs Singapore Airlines' Air India Investment Amid Scrutiny

Singapore state investor Temasek, the majority shareholder of Singapore Airlines, on Saturday backed the airline's Air India investment, as scrutiny grows over its stake in the loss-making Indian carrier, according to Reuters. Air India's request for about $1.5 billion in fresh equity from owners Tata Sons and Singapore Airlines was first reported by Reuters this week.

Singapore Airlines owns 25.1% of India's second-largest airline, with the remainder owned by Tata. News of the Air India $1.5 billion funding request prompted 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 ran a commentary arguing that Singapore Airlines could not realistically exit its Singapore Airlines Air India stake, with Tata the only plausible buyer. The commentary questioned what the 25.1% holding offered beyond a board seat and a share of the losses, while noting 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 Air India investment support reflected a long-term perspective, and that Temasek was supportive of Singapore Airlines' decision to invest in Air India. "Efforts of this scale take time and are not expected to be linear," the letter said. Temasek did not address whether it would support any capital contribution by Singapore Airlines to Air India, according to Reuters.

Air India's multibillion-dollar revamp has been under way since Tata took control of the former state-owned carrier in 2022. The airline has been hit by Pakistan's airspace ban on Indian carriers, disruptions from the U.S.-Israeli war with Iran, and the fallout from a crash last year that killed 260 people.

In the year to March, Air India and its budget unit Air India Express posted combined Air India financial losses of $2.33 billion, weighing on Singapore Airlines' profits. Singapore Airlines said on Thursday its board would carefully consider any requests for additional capital from Air India, taking into account the group's other capital requirements and Air India's business strategy.

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