Singapore state investor Temasek has backed Singapore Airlines' investment in Air India as questions intensify over the Indian carrier's reported request for about $1.5 billion in fresh shareholder equity. Temasek, the majority shareholder of Singapore Airlines, said it viewed the airline's decision from a long-term perspective, but did not say whether it would support a new capital contribution.
Reuters reported that Air India sought the funding from Tata Sons and Singapore Airlines after another loss-making year. Singapore Airlines owns 25.1% of India's second-largest airline, while Tata controls the remainder. The Singapore carrier said on Thursday that its board would carefully assess any request, considering Air India's strategy and the group's other capital needs.
The proposal has attracted scrutiny in Singapore. Opposition Workers' Party lawmaker Kenneth Tiong urged that Temasek funds not be used to support Air India, while commentary in Singapore's Business Times questioned the financial benefits of the minority holding. Temasek responded that a transformation of this size brings complex, multi-year operational and integration challenges and will not progress in a straight line.
Air India and its budget unit Air India Express recorded combined losses of about $2.33 billion in the year through March, according to Reuters. Those losses weighed on Singapore Airlines' results. Air India has also faced higher costs and operational disruption from Pakistan's airspace closure to Indian airlines, wider geopolitical conflict and fuel-price volatility.
Tata has been rebuilding Air India since taking control of the formerly state-owned airline in 2022. Singapore Airlines obtained its stake when its Indian joint venture Vistara merged with Air India in November 2024. Temasek said the investment gives Singapore Airlines deeper participation in India's expanding aviation market and supports growth beyond the constraints of its home hub.
The immediate issue is whether Singapore Airlines will join Tata in providing more equity and, if so, on what terms. Temasek's endorsement strengthens the strategic case for staying invested, but leaves the funding decision with the airline's board. Investors will now watch for a formal request, details of Air India's turnaround plan and evidence that operational improvements can narrow losses.
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