Should Singapore Airlines Reveal Its Maximum Investment in Air India?

[SINGAPORE] – Singapore Airlines’ (SIA) investment in Air India has come under the spotlight after the Indian carrier’s results contributed to a sharp decline in the Singapore group’s earnings for two consecutive quarters. Analysts and shareholders are now questioning how much more the airline is prepared to invest and how long it will support the turnaround.

SIA reported net earnings of S$52.4 million for the second quarter ended September, a steep 82.1% drop year-on-year, despite a 22.4% rise in operating profit to S$398.4 million and a 2.2% increase in revenue to S$4.9 billion. The main cause of the decline was the share of losses from Air India, repeating a similar impact in the previous quarter.

Air India’s turnaround efforts and challenges

Since September 2022, Air India has been executing a turnaround programme, including fleet renewal, network expansion, operational improvements, and product upgrades. The airline faced significant setbacks, including a tragic crash months ago and rising operational costs due to regional airspace closures and currency fluctuations.

SIA currently holds a 25.1% stake in Air India following the merger with Vistara, which it fully integrated in December 2024. The total cash injections by SIA, including equity payments and post-merger contributions, have reached nearly S$989 million, with potential additional funding pushing the investment close to S$1.4 billion.

Investor concerns and transparency demands

Analysts argue that shareholders need clearer guidance on the maximum amount SIA is willing to invest, the extent of losses it can tolerate, and the timeline for expected returns. While SIA chief Goh Choon Phong reiterated long-term support for Air India, he declined to comment on the ultimate investment ceiling, citing uncertainty and projections.

The stakes are high: India’s aviation market is the world’s third-largest and is projected to become the world’s third-largest economy by 2030, yet it remains highly competitive and historically unprofitable, with Gulf carriers capturing a significant share of international flights.

Experts highlight that Air India’s path to profitability remains unclear, making it a high-risk investment for SIA. Previous foreign investments, including stakes in Virgin Australia, have seen significant impairments, adding to the scrutiny from investors.

The way forward

Clarity on SIA’s maximum exposure and risk tolerance in Air India will allow shareholders to make informed decisions. As SIA positions itself to capture India’s market growth, investors want a clear picture of potential gains, losses, and the timeline for returns before committing further support to the airline’s multi-hub strategy.