Temasek Backs Singapore Airlines’ Air India Investment Amid Scrutiny Over Funding

NEW DELHI / SINGAPORE — Singapore state investor Temasek has publicly backed Singapore Airlines' investment in Air India. The endorsement comes amid growing political and media scrutiny regarding the airline's stake in the loss-making Indian carrier.

Earlier this week, reports emerged that Air India has requested approximately $1.5 billion in fresh equity from its owners, Tata Sons and Singapore Airlines. Singapore Airlines currently holds a 25.1% stake in India’s second-largest airline, while the remainder is owned by Tata.

The funding request drew a response from Kenneth Tiong, a lawmaker from Singapore’s opposition Workers’ Party, who urged that Temasek funds should not be utilized to support the Indian carrier. Additionally, a commentary in Singapore’s Business Times questioned the value of the 25.1% holding beyond a board seat and shared losses, noting that Tata remains the only plausible buyer.

In response to the commentary, Juliet Teo, joint head of portfolio development at Temasek Singapore, stated in a letter that the investor views Singapore Airlines’ decision to invest in Air India from a long-term perspective. She noted that the transformation of Air India involves complex, multi-year operational and integration challenges.

Teo added that outcomes are shaped by industry developments and external factors, including airspace disruptions, geopolitical developments, and fuel price volatility. “Efforts of this scale take time and are not expected to be linear,” the letter stated. However, Temasek did not clarify whether it would support any specific capital contribution by Singapore Airlines to Air India.

Air India has undergone a multibillion-dollar revamp since Tata Sons took control of the former state-owned carrier in 2022. The airline has faced several operational setbacks, including Pakistan’s airspace ban on Indian carriers, disruptions linked to regional conflicts involving the U.S., Israel, and Iran, and the fallout from a crash last year that resulted in 260 fatalities.

For the financial year leading up to March, Air India and its budget unit, Air India Express, reported combined losses of $2.33 billion. These financial strains have weighed directly on Singapore Airlines’ profits.

On Thursday, Singapore Airlines stated that its board would carefully evaluate any requests for additional capital from Air India. The airline noted that decisions would factor in the group's wider capital requirements alongside Air India's long-term business strategy.

"Large-scale corporate turnarounds in capital-intensive sectors like aviation require immense patience and strategic resilience. As seen in the Air India restructuring, external geopolitical and operational variables can heavily impact financial timelines. For strategic investors, balancing long-term market positioning with near-term capital preservation remains a critical governance challenge when dealing with multi-year turnaround projects." — Dr. Shishir Gupta, Founder & CEO, StartupLanes