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# SIA’s Air India Bet Is Already Dragging on Earnings — But the Bigger Test Is How Much More Cash It May Need
- URL: https://www.wwconemedia.com/sias-air-india-bet-is-already-dragging-on-earnings-but-the-bigger-test-is-how-much-more-cash-it-may-need/
- Published: 2026-09-08T06:54:24.000Z
- Updated: 2026-09-08T06:54:24.000Z
- Author: WWC NEWSDESK
- Tags: ASIA, BUSINESS, SINGAPORE

**SINGAPORE —** Singapore’s government has pushed back against concerns that Singapore Airlines’ investment in Air India could jeopardise the flag carrier’s ability to provide essential air services at home, even as questions intensify over the cost of turning around the loss-making Indian airline.

Transport Minister **Jeffrey Siow** told parliament on Tuesday, September 8, that there is currently no reason to doubt SIA’s ability to maintain its Singapore operations despite its exposure to Air India.

The parliamentary exchange came after Workers’ Party MP **Kenneth Tiong** questioned whether losses from SIA’s overseas associates could eventually affect the airline’s capacity to provide essential transport services and whether a sufficiently serious deterioration would trigger reporting requirements to the Civil Aviation Authority of Singapore.

Siow said losses at a foreign associate do not automatically cross that threshold.

The relevant test, he explained, is whether financial difficulties become severe enough to materially restrict resources needed for areas such as fleet maintenance and network operations.

According to the minister, SIA is currently nowhere near such a situation.

## Why Air India Is Suddenly Under Much Greater Scrutiny

The debate has intensified because Air India is reportedly seeking about **US$1.5 billion in new equity** from its two shareholders — Tata Sons, which owns 74.9%, and Singapore Airlines, which holds the remaining 25.1%.

Reuters reported in late August that the request comes after Air India recorded more than **US$2 billion in losses** for its latest financial year as the airline continues an expensive overhaul of its fleet, technology, services and operations.

If the US$1.5 billion request were ultimately funded strictly according to existing ownership percentages, SIA's proportional portion would theoretically be around **US$376 million**.

But that figure should **not** be treated as an approved SIA investment.

No such commitment has been announced.

SIA said on Tuesday that any request for additional capital would be assessed under its disciplined capital-allocation framework, taking into account Air India’s business plan, SIA’s own operating cash flow and competing requirements such as new aircraft and product investments.

That distinction is crucial.

**A funding request is not the same thing as a signed cheque.**

## Air India’s Losses Are Already Affecting SIA’s Earnings

While Air India’s debts do not automatically become Singapore Airlines’ liabilities, the Indian carrier’s financial performance is already affecting SIA through accounting for its share of associate losses.

For the quarter ended June 30, 2026, Singapore Airlines Group reported a **S$76 million net loss**, reversing a S$186 million profit in the same period a year earlier.

It was SIA’s first quarterly loss since 2022.

But blaming that result entirely on Air India would be inaccurate.

SIA simultaneously faced a **78.5% surge in net fuel costs**, with higher fuel expenses linked to the Middle East conflict. Its share of Air India-related losses also increased, adding to the pressure on earnings.

There was another striking number in those results: SIA generated **record quarterly revenue of about S$5.71 billion**.

Passenger and cargo demand remained strong even as fuel expenses and associate losses dragged the group into the red.

That is one reason the government argues that Air India’s problems should not be confused with an inability by SIA to operate its core business.

## SIA Still Has More Than S$10 Billion in Cash

Siow also pointed to SIA’s liquidity when responding to concerns about its finances.

As of June 30, Singapore Airlines had approximately **S$10.48 billion in cash reserves**, consisting of S$9.10 billion in cash and bank balances and S$1.38 billion in fixed deposits.

It also had access to another **S$3.24 billion in committed but undrawn credit facilities**.

Siow said SIA’s debt largely consists of longer-term borrowing, including bonds with maturities of five or 10 years, while its current liabilities remain well within the airline’s available cash resources.

This supports the government’s central argument: Air India may be a risky and costly investment, but there is currently no evidence that it threatens SIA’s ability to keep operating Singapore’s air network.

## Why SIA Wants Air India Despite the Losses

The strategy behind SIA’s Indian investment is bigger than the immediate profit-and-loss statement.

For decades, Singapore Airlines has faced a structural limitation: Singapore itself is a relatively small domestic market.

To continue expanding globally, SIA has increasingly looked toward partnerships and investments outside its home hub.

India offers what Singapore cannot — a huge domestic population, rapidly expanding air-travel demand and a geographic position capable of feeding passenger traffic toward Europe, the Middle East and Asia.

SIA first partnered with Tata in **2013** to establish Vistara.

When Vistara was merged into Air India in November 2024, Singapore Airlines exchanged its stake in Vistara plus cash for a **25.1% interest in the enlarged Air India Group**.

SIA describes the investment as part of a **multi-hub strategy**, giving the Singapore carrier direct participation in one of the world's biggest aviation markets rather than relying exclusively on Changi Airport for growth.

Temasek, SIA’s majority shareholder, has also publicly backed the long-term strategy, arguing that the transformation of Air India involves complex operational and integration challenges that will take years rather than quarters to resolve.

## But Air India Is an Extremely Difficult Turnaround

That long-term opportunity comes with substantial risk.

Air India is simultaneously attempting to modernise an ageing fleet, refurbish aircraft interiors, improve customer service, integrate businesses inherited from the Vistara merger and manage hundreds of aircraft orders.

Its turnaround has also been complicated by supply-chain constraints, expensive fuel, the depreciation of the Indian rupee and geopolitical disruptions.

Pakistan’s airspace restrictions have particularly affected Indian airlines operating routes to Europe and North America because aircraft can be forced to fly longer routes, increasing fuel and operating costs.

Air India has also remained under intense safety scrutiny following the **June 2025 crash of Air India Flight 171**, which killed 260 people, as well as subsequent operational incidents.

Its new chief executive, former Ethiopian Airlines CEO **Tewolde Gebremariam**, therefore inherits not simply a financial turnaround but an enormous operational and reputational rebuilding project.

## Tiong: Where Is the Limit?

Tiong’s argument in parliament was not simply that Air India currently loses money.

His concern was what might happen if those losses continue and progressively larger amounts of capital are required.

He noted that SIA holds only a minority stake and therefore does not possess full operational control over Air India.

Tiong asked whether the government could rule out future direct support through Temasek if the Air India investment deteriorated significantly, arguing that investors and Singaporeans should understand where the financial limits lie.

Siow rejected the suggestion that SIA’s commercial investment could simply be translated into a liability for Singapore taxpayers or national reserves.

He said Air India’s finances and SIA’s finances are separate, and stressed that SIA is a listed company whose investments are funded from its balance sheet and earnings.

The minister also noted that in more than 50 years of operations, SIA sought funding from Temasek only during the extraordinary circumstances created by the COVID-19 pandemic, when Singapore's aviation industry faced an existential crisis.

The government, he added, does not assess Temasek based on the performance of one individual portfolio company. Temasek manages a portfolio worth more than **S$500 billion**, containing investments with different risks and investment horizons.

## The Political Debate Has Another Sensitive Dimension

The Air India debate has also become entangled with racist and xenophobic comments targeting Indians online — rhetoric condemned by Singapore government leaders.

Tiong himself explicitly rejected racism and xenophobia and argued that his questions concern the commercial risks of the investment rather than nationality or ethnicity.

Siow nevertheless criticised some of Tiong’s broader public rhetoric, saying it created unsupported links between Air India, Temasek, taxpayers and Singaporeans' quality of life.

The minister said parliamentarians were entitled to question whether SIA’s investment would ultimately succeed, but argued that public debate should distinguish legitimate financial scrutiny from speculation unsupported by evidence.

That distinction matters because two questions can simultaneously be legitimate.

**Is Air India a strategically valuable long-term investment for Singapore Airlines?**

And:

**How much additional money should SIA be prepared to invest before the potential return no longer justifies the risk?**

The first question explains why SIA entered India.

The second may ultimately determine whether the bet succeeds.

## Air India Says Progress Is Happening

Singapore Airlines insists the turnaround should not be judged solely by Air India’s current losses.

SIA said Air India has made progress in customer experience and operational performance.

According to SIA, Air India’s net promoter score — a measure of customers' willingness to recommend a company — has improved by more than 70 points since November 2022, while both Air India and Air India Express received four-star classifications from Skytrax in May.

But SIA also acknowledges that there is still substantial work ahead.

Analysts similarly describe the Air India transformation as a long-duration investment rather than one where profitability should necessarily appear immediately. At the same time, every additional dollar committed to Air India carries an opportunity cost because SIA could deploy that capital elsewhere.

## The Real Test Is Still Ahead

For now, the government’s position is straightforward.

Singapore Airlines remains financially capable of maintaining its essential services.

Air India’s losses are not automatically SIA’s liabilities.

And decisions about whether to put additional money into the Indian airline belong primarily to SIA’s board and management.

But that does not eliminate the commercial question hanging over the deal.

India could become the second growth engine SIA has spent decades looking for.

Or Air India’s transformation could demand substantially more time and capital before shareholders see acceptable returns.

With another **US$1.5 billion reportedly being sought from Air India’s owners**, the most important part of SIA’s India gamble may therefore not be what it has already invested.

**It is what comes next.**

WWC ONE MEDIA M.J.E