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

[SINGAPORE] Jeffrey Siow, Minister For Transport 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 fresh equity injection of US$1.5 billion.

Tiong, 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 also asked whether such losses or continuing red ink would engage the notification duty in section 67B, and on what criterion. 

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

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

Regulator 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, among other factors, said Siow, who is also the Second Minister For Finance.

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

Losses in a foreign associate do not necessarily meet that test on their own, Siow pointed out.

SIA holds a 25.1 per cent stake in the Indian joint venture airline, whose majority shareholder is Indian company Tata Sons.

For its share, SIA booked a S$945.2 million loss from Air India for FY2026 ended Mar 31. The Singapore group’s financial statements showed that the Indian carrier 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,” added the minster, who wanted to correct Tiong’s question.

“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.”

The minister also corrected the misperception that Singaporeans are paying for SIA’s investment in Air India. “This is not the case.”

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

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

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 of Jun 30.

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

The Workers’ Party MP also compared the turnaround time Air India would potentially take with those of its peers’.

“Airline turnarounds that work show within three years. Japan Airlines went from bankruptcy to relisting in under three. Qantas went from a record A$2.8 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 9 (years).”

The Indian aviation market’s highly competitive nature was also mentioned, as he noted that leader Indigo carries two thirds of India’s domestic passengers, and the Indian government is said to be considering to allow 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 said. 

He 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.

Therefore, he is 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, a point at which it stops?

He wanted to check the investment limits as he said it could have implications for the reserves, and it could have implications for SIA, a designated operator.

“This cannot be a blank cheque, least of all, on a minority stake, 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

But Siow said Air India’s losses do not automatically become SIA’s liabilities. Neither does a capital request from India oblige SIA to provide it, and it is its board and management to decide whether any investment makes commercial sense for it and its shareholders.

He accused Tiong of exaggerating SIA’s indebtedness as he pointed 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, “which is well within SIA’s cash reserves of over S$10 billion”.

Furthermore, the Singapore government does not judge Temasek on any single holding, said the minister as he noted that the state investor made a “good” return from the equity and the bonds that it purchased from SIA during the pandemic.

An SIA spokesperson, 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 vast and emerging 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.