- Singapore Airlines seeks more control before funding Air India further, Reuters reports
- Air India may need to cut losses and give SIA greater board voting power in new terms
- Temasek will not directly fund or influence Air India decisions, per report sources
Before authorising any additional funding for Air India, Singapore Airlines (SIA) is expected to ask for more managerial influence and stronger governance powers, Reuters reported on Wednesday, citing sources.
According to the report, the proposed terms, which would be negotiated with Tata Sons, Air India's main owner, may include requirements for the Indian carrier to reduce its losses and increase board voting power.
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They further stated that Temasek, the biggest shareholder of Singapore Airlines, will neither supply the funds directly nor get involved in the airline's choices on Air India.
The criteria are being discussed after reports revealed last month that Air India was asking its owners for an additional $1.5 billion in equity.
Singapore Airlines stated in a statement that its board will carefully consider any request for more funding, taking into account the group's operating cash flow, Air India's business strategy, and its other capital needs.
The demand for stricter conditions is a reflection of mounting pressure on Singapore Airlines to defend raising its investment in Air India, which reported a $2.33 billion loss in the fiscal year that concluded in March, thus affecting the Singaporean airline's earnings.
Tata stated in July that it might take up to 10 years for Air India to turn back, and Singapore Airlines has lost money on a number of previous foreign investments. Tewolde Gebremariam, a former head of Ethiopian Airlines, has been named CEO of the Indian airline, succeeding Campbell Wilson, a senior executive of Singapore Airlines.
Officially, Singapore Airlines has little control over Air India. Its CEO, Goh Choon Phong, was given a single board seat as part of the 2022 merger agreement that combined its 49%-owned Indian carrier Vistara into Air India.
However, under Indian company law, its ownership of more than 25% gives it the authority to prevent special resolutions pertaining to significant business issues, such as mergers, share buybacks, and voluntary winding up.
An opposition MP in Singapore demanded that Temasek's finances not be used to support the Indian airline in response to Air India's funding request.
With S$10.48 billion ($8.29 billion) in cash reserves and S$3.24 billion in undrawn credit lines as of the end of June, Singapore Airlines stated on Tuesday that its investments in India have been and would continue to be financed by its internal resources.
Temasek openly supported Singapore Airlines' investment in the Indian carrier last month, claiming that the choice was made with a long-term perspective.
Temasek has identified India as a major growth market in its portfolio and has accumulated substantial exposure to the nation in a number of industries, including healthcare, financial services, consumer goods, and technology.
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