Singapore Airlines to Seek Stricter Terms for Potential Air India Capital Injection

Singapore Airlines is expected to demand stronger governance rights and greater management influence before agreeing to provide additional funding for Air India. According to sources familiar with the matter, the proposed conditions being negotiated with majority owner Tata Sons could include increased board voting power and requirements for the Indian carrier to reduce its losses. This follows reports that Air India is seeking approximately 1.5 billion US dollars in fresh equity. Tata has reportedly approved a 1.1 billion US dollar infusion representing its pro rata share, while Singapore Airlines holds the remaining 25.1 percent stake.

Singapore Airlines stated that its board will carefully evaluate any request for additional capital by considering the business strategy, operating cash flow, and other capital requirements of Air India. The push for tougher terms comes as Air India reported a 2.33 billion US dollar loss for the financial year ending in March. While Singapore Airlines currently holds a single board seat and the power to block special resolutions under Indian law, the airline is facing pressure to justify further investment in a turnaround that Tata indicated could take up to a decade.

Temasek, the majority shareholder of Singapore Airlines, has declined to comment on specific speculations but previously expressed a long term view of the investment. Singapore's Senior Minister K Shanmugam stated that the decision to invest lies with Singapore Airlines and that Temasek expects the airline to act responsibly. Singapore Airlines clarified that its investments in India are funded by internal resources, noting it holds 10.48 billion Singapore dollars in cash reserves and 3.24 billion Singapore dollars in undrawn credit lines.