Air India seeks $1.5bn: How much risk does Singapore Airlines carry?

Air India's losses have weighed on SIA's accounts, but the Singapore government said the carrier is not obliged to fund the latest capital request

On Tuesday, Singapore’s Parliament debated who bears the financial risk of Singapore International Airlines’ (SIA) investment in Air India, the SIA itself, or ultimately Singapore’s state-linked capital through Temasek.

 

This came after Air India sought about $1.5 billion in fresh equity from its owners, Tata Sons and Singapore Airlines (SIA), following a combined loss of $2.33 billion for the financial year ended March 2026. Tata Sons has reportedly approved $1 billion of the equity.

 

The Singapore government defended SIA’s investment in Air India, saying it was a long-term strategic investment that supports the carrier’s multi-hub strategy and provides access to India’s large aviation market.

  

But the episode has raised fresh questions about how much of the financial pressure at Air India can ultimately be borne by SIA, and whether it could affect the Singapore carrier’s own operations.

SIA's exposure to Air India

SIA holds a 25.1 per cent stake in Air India. The stake came after Vistara, the joint venture between SIA and Tata Sons, was consolidated into Air India in November 2024. Air India Limited, which also owns Air India Express, has Tata Sons’ holding at 74.9 per cent.

 

SIA's FY2025/26 financial statements show the scale of the accounting impact. As of March 31, 2026, the carrying amount of its Air India investment was S$1.1346 billion. During the year, SIA recognised S$945.2 million as its share of Air India's losses. The figures were reported in SIA's audited financial statements.

 

SIA's own financial performance remained profitable despite the impact. Its net profit for FY2025/26 fell 57.4 per cent to S$1.184 billion. The decline was partly due to the absence of a S$1.098 billion non-cash accounting gain recorded when the Air India-Vistara merger was completed, as well as SIA's share of Air India's full-year losses.

 

However, SIA’s operating performance remained stronger as it reported a full-year operating profit of S$2.375 billion, up 39 per cent from the previous year. Operating profit in the second half rose 72 per cent year-on-year to S$1.572 billion.

Does SIA have to fund Air India's losses?

During the debate yesterday, Singapore Transport Minister Jeffrey Siow told Parliament that Air India's losses do not automatically become liabilities of SIA and that Air India's latest capital request does not oblige SIA to provide the requested funds.

 

“Air India's losses do not automatically become SIA's liabilities. Neither does the capital request from Air India oblige SIA to provide it,” Siow said.

 

SIA said its investments in India have been and will continue to be funded through its internal resources, subject to board approval and its capital allocation framework, Channels News Asia reported, citing a fresh statement by the airline.

 

It also said any additional capital request would be assessed against Air India's business strategy, SIA Group's operating cash flow and its own investment requirements.

When could Air India's losses affect SIA's Singapore operations?

Singapore's Transport Ministry said the relevant issue under the Civil Aviation Authority of Singapore Act is not simply whether SIA has losses in a foreign associate.

 

SIA became a designated operating entity under the Act in April 2025. Under Section 67B, it must report an event or irregularity that may materially impair its ability to provide essential transport services. The ministry said losses at a foreign associate do not necessarily meet that threshold on their own.

 

The test is whether Air India's losses, or other factors, materially constrain resources available for SIA's fleet, maintenance or network operations in Singapore.

 

“We are nowhere close to this scenario,” Siow said. The ministry also said there was no reason to doubt SIA's ability to provide air services in Singapore.

 

Notably, the airline said it had S$10.48 billion in cash reserves as of June 30, 2026, while Singapore's Transport Ministry said it had more than S$10 billion in cash reserves and over S$3 billion in undrawn credit facilities. SIA separately said its committed lines of credit stood at S$3.24 billion, all undrawn.

Where does Temasek's exposure begin and end?

Singapore’s global investment company Temasek does not directly own the 25.1 per cent Air India stake. Its exposure comes through its ownership of SIA.

 

Temasek's portfolio, as of March 31, 2026, lists a 50 per cent stake in Singapore Airlines. Temasek said portfolio companies' boards and management are responsible for their business decisions, and that Temasek does not direct their day-to-day operations.

 

The Singapore government has therefore treated any decision on additional Air India funding as a matter for SIA and its shareholders rather than as a direct Temasek funding commitment. Siow said SIA had not sought additional capital from its shareholders and that, if it did, the matter would be commercial.

 

As of now, the financial exposure is therefore concentrated at SIA's Air India investment level. SIA has already absorbed a substantial share of Air India's losses through its accounts and carries a S$1.1346 billion investment value. But the current Air India funding request does not automatically create an equivalent liability for SIA, while Singapore's Transport Ministry said SIA's ability to operate its Singapore network has not been materially constrained.