Singapore Airlines (SIA) is reportedly poised to seek greater influence over Air India's management and stronger governance rights as a prerequisite for injecting fresh capital into the Indian carrier. Air India, which is majority-owned by Tata Sons, is seeking approximately $1.5 billion in new equity from its shareholders, with SIA holding a 25.1 percent stake.
Sources familiar with the discussions indicate that the proposed conditions, which would be negotiated with Tata Sons, could include enhanced voting power on the Air India board and specific requirements for the airline to reduce its substantial losses. Tata has already approved its pro-rata share of a $1.1 billion capital infusion.
SIA Under Pressure to Justify Investment
The push for tougher terms comes at a time when Singapore Airlines faces scrutiny to justify further investment in Air India. The Indian airline reported a significant loss of $2.33 billion in the financial year ending March, directly impacting SIA's profitability.
Currently, Singapore Airlines has limited formal influence over Air India's day-to-day operations. Under the 2022 merger agreement that integrated its 49%-owned Indian carrier Vistara into Air India, SIA secured one board seat, held by its CEO, Goh Choon Phong. However, its stake above 25% grants it the power to block special resolutions on major corporate matters, such as mergers, share buybacks, and voluntary winding up.
Air India's Turnaround and SIA's Financial Position
Tata Sons stated in July that Air India's turnaround could take up to a decade. The airline has since appointed Tewolde Gebremariam, former Ethiopian Airlines chief, as its new CEO, replacing Campbell Wilson.
Singapore Airlines has affirmed that its investments in India will continue to be funded through internal resources. The airline reported S$10.48 billion in cash reserves and S$3.24 billion in undrawn credit lines at the end of June. Temasek, SIA's majority shareholder, has publicly backed the investment, emphasizing a long-term view of the decision, but will not directly provide capital or intervene in Air India-related choices.