New Delhi: Singapore Airlines is expected to seek stronger governance safeguards and greater influence over Air India’s management before agreeing to invest additional capital in the loss-making Indian airline, according to people familiar with the matter. The proposed conditions could include greater voting power on the board and specific targets for reducing Air India’s losses.

The development comes after Air India sought around $1.5 billion in fresh equity from its owners, Tata Sons and Singapore Airlines, as the airline continues a major turnaround programme. Tata has already approved a $1.1 billion infusion, according to people familiar with the matter, while Singapore Airlines is expected to consider its contribution in line with its 25.1% stake.

The proposed safeguards would be discussed between Singapore Airlines and Tata Sons, Air India’s majority owner. No final agreement on the conditions has been announced.

Singapore Airlines wants stronger safeguards

Singapore Airlines currently owns 25.1% of Air India, giving it a significant economic interest in the airline but relatively limited formal management influence.

Under the 2022 arrangement that brought Tata-owned Vistara into Air India, Singapore Airlines received one seat on Air India’s board. The seat is held by Singapore Airlines chief executive Goh Choon Phong.

However, its stake of more than 25% also gives Singapore Airlines the ability to block certain special resolutions under Indian company law. These include major corporate decisions such as mergers, share buybacks and voluntary winding up.

The reported push for greater voting power would therefore represent a possible expansion of Singapore Airlines’ influence over the airline’s future direction.

The proposed conditions could also include targets for Air India to reduce its losses. This comes at a time when the airline is undergoing a costly transformation involving fleet refurbishment, operational improvements, technology upgrades and changes to its organisational structure.

Air India seeks $1.5 billion from owners

Reuters reported in August that Air India had sought approximately $1.5 billion in fresh equity from Tata Sons and Singapore Airlines. The request followed a sharp deterioration in the airline’s financial performance.

Air India and its budget subsidiary Air India Express together reported a loss of $2.33 billion for the financial year ended March. The combined loss was more than double the previous year’s figure and also affected Singapore Airlines’ financial results.

The latest funding request is among the largest publicly reported shareholder funding requirements since Tata Group took control of the former state-owned carrier in 2022.

Singapore Airlines said its board would carefully evaluate any request for additional capital. The assessment would consider Air India’s business strategy, Singapore Airlines’ operating cash flow and its other capital requirements.

This means that the reported $1.5 billion request does not automatically translate into an immediate funding commitment from Singapore Airlines.

Why Air India needs more capital

Air India has been undertaking a multi-year transformation since its acquisition by Tata Group. The programme involves modernising the fleet, refurbishing existing aircraft, improving customer experience, upgrading technology and strengthening operational systems.

The airline has also faced several external challenges, including supply-chain disruptions, airspace restrictions and higher operating costs. The company is simultaneously dealing with the financial impact of its legacy systems and the scale of its fleet renewal plans.

Tata Sons chairman N Chandrasekaran has previously indicated that turning around Air India could take as long as a decade. The long timeline highlights the size of the challenge facing the airline and explains why further capital may be required in the coming years.

Air India has also sought to defer deliveries of some aircraft on order from Airbus and Boeing as part of efforts to control costs and manage the pace of its transformation.

Singapore Airlines faces pressure over investment

The fresh funding discussion comes at a sensitive time for Singapore Airlines. Its 25.1% holding means that Air India’s financial performance directly affects its own results.

Singapore Airlines has also faced questions about some of its overseas investments, increasing pressure to demonstrate that additional capital commitments are financially justified.

The carrier has said that its investments in India will continue to be funded from its own internal resources, subject to board approval and its capital allocation priorities. As of the end of June, Singapore Airlines had S$10.48 billion in cash reserves and S$3.24 billion in undrawn credit lines.

Singapore state investment company Temasek, which is the majority shareholder of Singapore Airlines, is not expected to directly provide funds for the proposed Air India investment or participate in decisions regarding the capital injection.

Temasek has nevertheless backed Singapore Airlines’ investment in Air India, describing it as a long-term strategic commitment. The Singaporean state investor has highlighted India’s importance as a growth market.

Temasek keeps distance from funding decision

Air India’s funding requirement has also triggered political scrutiny in Singapore because of Temasek’s ownership of Singapore Airlines.

An opposition lawmaker had questioned whether Singapore’s state-linked resources should indirectly support Air India through Singapore Airlines. The issue has since received attention in Singapore’s political and public debate.

Singapore’s Senior Minister K. Shanmugam said that any decision on investing in Air India would be taken by Singapore Airlines. He also said Temasek expected the airline to make investment decisions responsibly.

The latest discussions indicate that responsibility for deciding the safeguards, governance expectations and performance targets attached to any new investment rests with Singapore Airlines rather than Temasek.

Air India enters a crucial phase

The proposed funding and governance discussions come as Air India prepares for another important phase in its transformation. The airline has appointed former Ethiopian Airlines chief Tewolde Gebremariam as its new chief executive, replacing Campbell Wilson, who previously worked at Singapore Airlines.

For Singapore Airlines, the decision is a balance between protecting its investment and maintaining exposure to India’s rapidly expanding aviation market.

For Tata Group, securing additional capital remains important as it attempts to transform Air India into a stronger global carrier while controlling losses and improving operational efficiency.

The reported demand for greater influence suggests that Singapore Airlines wants clearer safeguards before committing more money. Whether the two shareholders agree on those conditions will be important for Air India’s next stage of restructuring.

Conclusion

Singapore Airlines has not rejected the possibility of putting more money into Air India, but it is expected to seek stronger governance rights and measurable performance safeguards before making another investment. With Air India facing substantial losses and requiring continued capital during its long-term turnaround, the negotiations with Tata Sons could shape how the airline is managed and financed in the years ahead.