Singapore Airlines, backed by state investor Temasek Holdings Pte, is expected to seek greater influence over management and stronger governance rights before approving a capital injection into Air India Ltd., according to two people familiar with the matter.
The proposed conditions, which would be negotiated with Air India’s majority owner Tata Sons Pvt. Ltd., is likely to include greater board voting power and requirements for the Indian carrier to narrow its losses, the people said. Temasek, Singapore Airlines’ majority shareholder, would neither provide the capital itself nor intervene in the carrier’s decisions concerning Air India, they said.
The discussion of conditions comes after Reuters last month reported Air India was seeking about $1.5 billion in fresh equity from its owners.
Two other people said Tata had approved a $1.1 billion infusion, representing its pro-rata share. Singapore Airlines holds the remaining 25.1% stake.
All four of the people declined to be identified as the information is not yet public. Temasek declined to comment on “speculation with respect to the points on Temasek”. In a statement, Singapore Airlines said its board would carefully evaluate any request for additional capital, taking into account Air India’s business strategy, the group’s operating cash flow and its other capital requirements.
Tata and Air India did not respond to requests for comment.
Limited Influence
The push for tougher terms reflects growing pressure on Singapore Airlines to justify increasing its investment in Air India, which posted a $2.33 billion loss in the financial year ended March, weighing directly on the Singaporean carrier’s profits.
Singapore Airlines has lost money in several past overseas investments, and Tata Sons said in July that . The Indian carrier has appointed former Ethopian Airlines head as its new CEO to replace former Singapore Airlines executive .
Singapore Airlines has limited formal influence over Air India. Under a 2022 merger agreement that folded its 49%-owned Indian carrier Vistara into Air India, it received a single board seat, taken up by its CEO Goh Choon Phong.
Its stake of more than 25% does, however, give it the power under Indian company law to block special resolutions covering major corporate matters, including mergers, share buybacks and voluntary winding up.
Air India’s funding request drew a call from an opposition lawmaker in Singapore for Temasek’s funds not to be used to support the Indian airline.
Singapore Airlines’ interest in Air India
Singapore Airlines said on Tuesday that its investments in India have been and will continue to be funded by its internal resources, noting it had S$10.48 billion ($8.29 billion) in cash reserves and S$3.24 billion in undrawn credit lines as of end-June.
Temasek last month publicly backed Singapore Airlines’ investment in the Indian carrier, saying it took a long-term view of the decision.
Singapore’s Senior Minister K. Shanmugam said on Saturday any decision to invest in Air India lay with Singapore Airlines, and that Temasek expected the airline to make investment decisions responsibly.
The onus for setting safeguards, governance expectations and performance targets for any additional investment in Air India lies with Singapore Airlines, not Temasek, one of the people said.
Singapore Airlines’ strategy is to benefit from India’s long-term aviation growth while managing the risks of a major airline turnaround, the person added, noting that Temasek backed similar bets on Indian companies in the past, including hospital operator Manipal Health.
Temasek has built up significant exposure to India across sectors including healthcare, financial services, consumer and technology, and has cited the country as a key growth market in its portfolio.