Air India investment has ‘not adversely affected’ SIA’s ability to serve Singaporeans for now: Jeffrey Siow

[SINGAPORE] Minister for transport Jeffrey Siow crossed swords with Workers’ Party MP Kenneth Tiong in Parliament on Tuesday (Sep 8) over loss-making Air India’s reported call to shareholders including Singapore Airlines (SIA) for a fresh equity injection of US$1.5 billion.

Tiong, the MP for Aljunied GRC, had asked “whether losses from and carrying amount in (SIA’s) foreign associates have been assessed against its capacity to provide essential transport services” since the national carrier became a designated operating entity under the Civil Aviation Authority of Singapore (CAAS) Act.

He had also asked if such losses or continuing red ink would engage the notification duty in Section 67B of the Act, and on what criterion. 

Siow replied that CAAS’ assessment at present shows SIA’s ability to serve Singaporeans is “not adversely affected”, adding that the viability of SIA’s investment in Air India is a commercial matter between the carrier and its shareholders.

SIA became a designated operating entity under the CAAS Act from April 2025, after the Transport Sector (Critical Firms) Act came into force. 

CAAS assesses various factors in determining whether the listed airline can operate essential services here safely and reliably. These include SIA’s overall financial health, said Siow, who is also second minister for finance.

Section 67B is not a financial reporting rule, but it requires SIA to report any event or irregularity that may materially impede or impair its provision of essential transport services.

Siow noted that losses in a foreign associate do not necessarily meet that test on their own.

SIA holds a 25.1 per cent stake in Air India, whose majority shareholder is Indian company Tata Sons.

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For its share in the joint venture, SIA booked a S$945.2 million loss for FY2026 ended Mar 31. The Singapore group’s financial statements showed that Air India posted a loss of about S$3.8 billion for the year.

As at Mar 31, SIA’s carrying amount in Air India amounted to only S$1.1 billion against a total cost of S$2.1 billion.

“The relevant question is whether such losses, or anything else, reach the point of materially constraining the resources available for SIA’s fleet, maintenance or network operations here,” Siow said.

“That is a judgment based on facts, and we are nowhere close to this scenario. At present, there is no reason for us to doubt SIA’s ability to deliver air services in Singapore.”

Siow also addressed the misperception that Singaporeans are paying for SIA’s investment in Air India. “This is not the case,” he said.

SIA funds investments from its earnings, he added, noting that it has more than S$10 billion in cash reserves and over S$3 billion in undrawn credit facilities.

“Whether its specific investment in Air India proves valuable is for SIA and its shareholders to answer,” he added. If SIA were to seek more funds from its shareholders, "that would be a commercial matter between the company and its shareholders”.

Investment limits

Tiong responded that SIA is in net debt: It held S$10.5 billion in cash against S$10.7 billion in debt as at Jun 30.

“The undrawn facilities the minister cited are loans not yet taken,” he said. “More debt, not more capital.”

The MP also compared the turnaround time Air India would potentially take with those of its peers. “Airline turnarounds that work show within three years,” he said.

“Japan Airlines went from bankruptcy to relisting in under three. Qantas went from a record A$2.8 billion (US$2 billion) loss to a record profit in two. India’s own plan in 2022 said five years. Its losses doubled last year, as chairman now says five to 10 (years).”

Tiong noted the Indian aviation market’s highly competitive nature, pointing out that Indigo carries two-thirds of the country’s domestic passengers.

He also flagged that the Indian government is said to be considering allowing two airport hub operators to set up their own airlines.

“So that means that the landlord at each of Air India’s hubs would then also be its competitor, and could steer the prime slots that minister mentioned its own way.”

Tiong further noted that SIA, which does not control Air India, will consider any future injections based on Air India’s requirements, but that is open-ended by design.

He is therefore against further cash infusions from SIA’s majority shareholder and state investor Temasek, even as he supports SIA’s ability to make its own decisions.

Tiong asked if the government has satisfied itself that there is a limit on SIA’s further cash infusions to Air India, a return threshold, a maximum exposure or a point at which it stops.

He explained that this could have implications for Singapore’s reserves and for SIA, a designated operator.

“This cannot be a blank cheque, least of all, on a minority stake,” he said. “We ask because through the reserves, Singaporeans are SIA’s stakeholder of last resort, and the stakeholder of last resort needs to know where the line is.”

Temasek not judged on any single holding

Siow said, however, that Air India’s losses do not automatically become SIA’s liabilities.

At the same time, a capital request from Air India also does not oblige SIA to provide it, and it is up to its board and management to decide whether any investment makes commercial sense for it and its shareholders.

The minister accused Tiong of exaggerating SIA’s indebtedness, pointing out that most of SIA’s debt is in non-current long-term bonds at “low” interest rates. Its current liabilities to be repaid within the next 12 months are under S$3 billion, “well within SIA’s cash reserves of over S$10 billion”.

Furthermore, the government does not judge Temasek on any single holding, Siow added. He noted that the state investor made a “good” return from the equity and the bonds that it purchased from SIA during the Covid-19 pandemic.

A spokesperson for SIA, in a statement issued after the 20-minute exchange in Parliament, said that the investment has facilitated deeper commercial cooperation between SIA and Air India and strengthened the complementary roles of Singapore and India as international aviation hubs.

SIA is the only non-Indian airline group with a direct stake that accords it direct participation in and more access to the Indian airline market.

The Indian investments have been and will continue to be funded through SIA’s internal resources, subject to board approval and capital allocation framework, the spokesperson said.