Singapore transport minister defends Singapore Airlines’ Air India stake, saying SIA must expand overseas, fund investments from internal resources, and keep decisions commercial amid scrutiny over Air India losses and turnaround
SINGAPORE: Singapore’s transport minister on Tuesday defended Singapore Airlines’ investment in Air India, saying the city-state’s flag carrier must grow overseas because there is a limit to how many people will fly to or from Singapore.
Responding to a question in parliament, Minister Jeffrey Siow said the flag carrier was a listed company that funds investments from its own balance sheet and it had not sought further capital from shareholders.
The airline is majority-owned by Singapore state investor Temasek.
Singapore Airlines’ 25.1% stake in Air India has weighed on its earnings and been subject to political scrutiny as the Indian carrier’s losses widened during a multibillion-dollar turnaround that could take up to a decade.
Reuters reported last month that Air India is seeking about $1.5 billion in fresh equity from its owners, Tata Sons and Singapore Airlines.
“Many overseas investment returns will not necessarily emerge immediately. Whether its specific investment in Air India proves valuable is for (Singapore Airlines) and its shareholders to answer,” said Siow, adding the current assessment was that the airline’s ability to serve Singaporeans was not adversely affected.
“Singapore Airlines has not sought further capital from its shareholders, and if it were to do so, that would be a commercial matter between the company and its shareholders,” he said.
Singapore Airlines said in a statement on Tuesday that investments in India have been and will continue to be funded through the flag carrier’s internal resources, subject to board approval and a disciplined capital allocation framework.
It said Air India’s transformation was a complex, multi-year programme that was not expected to be linear and the flag carrier’s investment in the airline was a long-term strategic commitment aligned with its multi-hub strategy.
News of the funding request had prompted Kenneth Tiong, a lawmaker from Singapore’s opposition Workers’ Party, last month to urge that Temasek’s funds not be used to shore up the Indian carrier and submit the question answered in parliament on Tuesday.
On Saturday, Singapore’s Senior Minister K Shanmugam said that as a shareholder of Singapore Airlines, Temasek expects the company to make responsible investment decisions and that such decisions are for the company to make.
He also asked police to examine what he described as racist comments about the Air India investment debate.
“That news has given rise to a whole series of anti-Indian, racist ranting online,” Shanmugam said over the weekend, adding that Temasek’s CEO and senior management had been attacked over their ethnicity.
Source: Emirates 24|7