Air India investment does not impede SIA’s operational capabilities: Jeffrey Siow

Singapore Airlines (SIA) stated on Tuesday (Sep 8) that its investments in India have been and will continue to be funded through internal resources. This clarification followed a parliamentary inquiry by Workers’ Party MP Kenneth Tiong (Aljunied GRC), who questioned whether losses from SIA’s foreign associates had been assessed against its capacity to provide essential transport services. SIA established Vistara as a joint venture with Tata Sons in 2013. Following Vistara’s integration into Air India in November 2024, SIA holds a 25.1 per cent stake in the expanded Air India Group. The airline emphasized that its investments in India are subject to board approval and adhere to its disciplined capital allocation framework. An SIA spokesperson confirmed the company maintains one of the strongest financial positions in the airline industry, with S$10.48 billion in cash reserves as of June 30. These reserves include S$9.10 billion in cash and bank balances and S$1.38 billion in fixed deposits. The group carries less than S$3 billion in current debt obligations, which are fully covered by its cash reserves. SIA also has access to S$3.24 billion in committed lines of credit, none of which have been drawn down. In 2022, SIA and Tata Sons announced the merger of Air India and Vistara, stating that the investment would be fully funded with internal cash resources. Recent scrutiny intensified after a Reuters report cited sources indicating that Air India sought an additional US$1.5 billion in support from its owners, shortly after posting a record annual loss. Transport Minister Jeffrey Siow assured parliament that SIA’s ability to serve Singaporeans is unaffected by its investment in Air India. He reiterated that SIA’s operations and resources for fleet maintenance and network activities in Singapore remain robust. Senior Minister K Shanmugam mentioned that police were investigating racist and xenophobic online comments related to SIA’s investment in Air India, as well as the Nepal-Tibet disaster. SIA described Air India’s transformation as a "complex, multi-year programme" that is not expected to proceed linearly. Challenges include prolonged restrictions on Pakistani airspace, the 2023 crash that killed 260 people, the rupee’s depreciation against the US dollar, supply chain disruptions, the loss of a key market due to the Middle East conflict, and high fuel prices. Despite these challenges, SIA noted that Air India has made measurable improvements in customer satisfaction and operational performance. The airline highlighted that Air India’s net promoter score rose by over 70 points since November 2022. In May, the carrier received a four-star rating from Skytrax, and Air India Express was certified as a four-star low-cost airline, comparable to leading international carriers. SIA and Tata Sons have both acknowledged that substantial work remains, but both parties remain committed to supporting Air India’s long-term transformation. Siow responded to Tiong’s parliamentary question by emphasizing that SIA’s board and management are responsible for determining the commercial viability of any investment. He clarified that Section 67B of the Civil Aviation Authority of Singapore Act does not apply to losses in foreign associates unless they significantly constrain SIA’s operational capabilities. He noted that SIA is "nowhere near" such a scenario. SIA’s stake in Air India has become a major factor affecting its earnings. For the 2026 financial year ended March 31, SIA recorded a $945.2 million loss from its share in the joint venture. Despite this, SIA reported record revenues of $20.5 billion and a 39 per cent increase in operating profit for FY2026. However, the carrier posted a net loss of $76 million for the first quarter of FY2027. Tiong raised concerns about the pace of recovery compared to other national carriers and questioned whether the government had imposed limits on SIA’s future investments in Air India. He also asked whether the government might intervene to draw upon SIA’s reserves to support Air India, referencing past support during the pandemic. Tiong likened Parliament’s role to a "risk team" advising SIA’s board on investment decisions. Siow maintained that SIA’s ability to deliver air services in Singapore remains unaffected, and that the airline continues to operate effectively despite ongoing challenges.