By Boo Kok Chuon

Air India is reportedly asking its two shareholders, Tata Sons and Singapore Airlines (“SIA”), for approximately US$1.5 billion in fresh equity.[1]

The headline number is eye-catching. Air India and its budget subsidiary Air India Express reportedly suffered combined losses of approximately US$2.33 billion in the financial year ended March 2026. Reuters reports that the proposed funding would likely be injected in tranches and that discussions are still ongoing. It also reported, intriguingly, that SIA “would need to contribute its share of the proposed infusion for the investment to go through”.[1]

For Singaporeans, there is an understandable temptation to reduce the story to a simple question: Why should SIA put more money into a loss-making Indian airline?

That question, apparently, skips several steps.

Air India is an Indian flag carrier. SIA is closely identified with Singapore. Once national identities enter the conversation, a corporate investment can quickly become an emotional or political discussion.

For investors and business owners, however, there is a more useful way of looking at it: put the flags aside for a moment and look at the accounts, what exactly did SIA buy? How are Air India’s losses already affecting SIA? And if SIA agrees to inject more money, what actually changes?

First, SIA already owns 25.1% of Air India

SIA was previously a 49% shareholder of Vistara, with Tata Sons owning the remaining 51%. In November 2022, SIA and Tata agreed to merge Vistara into Air India.[2] As part of that transaction, SIA agreed to invest INR20.585 billion, then approximately S$360 million, into Air India. Upon completion, SIA would hold 25.1% of the enlarged Air India.[2] The merger was completed on 12 November 2024. SIA acquired 25.1% of Air India, which thereafter became an associated company of the SIA Group.[3]

SIA had therefore acquired its 25.1% interest, rather than gradually paying instalments to reach that stake. The original deal did, however, contemplate further capital injections if required to fund Air India’s growth and operations.

Under the arrangements announced in 2022, SIA and Tata agreed to participate in additional capital injections, if required, for FY2022/23 and FY2023/24. Based on SIA’s intended 25.1% interest, SIA’s potential portion was capped at INR50.2 billion, then approximately S$880 million. The actual amount would depend on matters including Air India’s business plan and access to other funding.[2]

Following completion, SIA injected approximately INR31.945 billion, or about S$500 million, in accordance with the Implementation Agreement. It subsequently injected another INR10.807 billion, or approximately S$166.9 million, in March 2025. SIA’s equity interest nevertheless remained unchanged at 25.1%.[3]

SIA’s audited FY2024/25 financial statements recorded the total cost of its Air India investment at approximately S$2.096 billion.[3]

SIA had also said before completion that future capital injections would be considered based on Air India’s requirements and available funding options.[4]

That distinction is important when considering the latest US$1.5 billion request. The newly reported funding request should therefore not automatically be characterised as another instalment of SIA’s original purchase price. Nor has it presently been announced as a conventional rights issue. Reuters describes it as a proposed “fresh equity injection“, with discussions ongoing.[1]

Air India’s losses are already affecting SIA

Some may assume that because SIA owns only 25.1% of Air India, Air India’s losses have little to do with SIA unless SIA actually transfers more cash to India.

Accounting, however, does not quite work that way. As Air India is an associate of the SIA Group, the investment is accounted for using the equity method.[5] Under the equity method, an investment is initially recognised at cost and its carrying amount is subsequently adjusted to recognise the investor’s share of the associate’s profits or losses.[6]

Consider a simplified example:

Suppose you own 25% of a restaurant. The restaurant suffers a loss of $400,000. Nobody necessarily sends you an invoice asking you to pay $100,000. However, economically, your share of the business has suffered approximately $100,000 of that loss. Equity accounting broadly reflects this economic reality by recognising the investor’s share of the associate’s results.

In the context of, Air India, the actual number is substantial. For the financial year ended 31 March 2026, SIA recognised S$945.2 million as its share of Air India’s losses.[5]

At the same reporting date, the carrying amount of SIA’s investment in Air India stood at approximately S$1.135 billion.[5] So Air India’s losses are not some remote problem sitting entirely inside Tata’s Indian subsidiary. They are already flowing through SIA’s financial statements.

SIA’s basic earnings per share fell from 89.3 cents in FY2024/25 to 38.4 cents in FY2025/26.[7] It would be incorrect to attribute that entire reduction to Air India, particularly because the previous year also included a substantial one-off accounting gain from the Vistara-Air India merger. Nevertheless, a S$945.2 million share of associate losses is plainly a significant drag on SIA’s reported earnings.[5]

Does that mean Air India has been impaired?

Not necessarily. This is where loss and impairment need to be distinguished.

SIA’s auditors specifically identified the impairment assessment of Air India as a key audit matter for FY2025/26.[5] Management assessed that there were indicators of impairment, triggered by challenging operating conditions and heightened geopolitical uncertainty. That required an impairment assessment involving significant judgement over the valuation methodology and assumptions used to determine the investment’s recoverable amount.[5]

The question was essentially this:

After recognising all these losses, is the remaining Air India investment still worth at least the S$1.135 billion at which SIA is carrying it?

In simpler terms, does the economic value that SIA expects to recover from its Air India investment still support the amount recorded in SIA’s books?

Management concluded that the recoverable amount exceeded the carrying amount. SIA’s auditors reported that the valuation methodology applied by management was appropriate and that the key assumptions were reasonable based on observable market data and available supporting evidence.[5]

Therefore, the existence of substantial losses did not automatically produce an additional impairment.

Operating losses reduce the carrying amount through equity accounting. Impairment asks whether the remaining carrying amount can still be recovered.

They are related, but they are not the same thing.

Now comes the US$1.5 billion question

Reuters reports that Air India is now seeking approximately US$1.5 billion of fresh equity from Tata and SIA.[1] The proposed funding is expected to come in tranches and discussions remain ongoing.[1]

If the US$1.5 billion were contributed strictly in proportion to the existing shareholdings, SIA’s 25.1% share would mathematically amount to approximately US$376.5 million. For clarity, that is merely arithmetic inference. It is not an announced commitment by SIA.

Indeed, the precise proposed terms have not been publicly disclosed. This makes one particular statement in the Reuters report especially interesting: according to a source cited by Reuters, SIA would need to contribute its share of the proposed infusion for the investment to proceed.[1]

Why? If this were simply an ordinary pro-rata equity raising, one might expect a shareholder that declined to subscribe to face dilution, subject of course to the company’s constitutional documents, shareholders’ arrangements and applicable law.

The public information presently available does not tell us enough to determine what contractual mechanism applies here. Nor does it establish what would happen to the respective ownership percentages if SIA declined to participate.

Several mechanisms could potentially explain the reported position, although these remain hypotheses unless and until the relevant funding terms or shareholder arrangements are disclosed.

SIA may have pre-emption or participation rights entitling it to maintain its percentage when new shares are issued. Such rights would not ordinarily, by themselves, compel SIA to invest, but they could affect how a recapitalisation is structured.

The shareholders’ arrangements may also contain reserved-matter or consent provisions governing new share issues, changes in capital structure or major financing decisions.

There could alternatively be funding provisions or consequences for non-participation specifically negotiated between Tata and SIA.

Or the explanation may be considerably simpler: Tata may be commercially unwilling to provide the contemplated US$1.5 billion unless SIA contributes proportionately, irrespective of whether SIA is legally obliged to do so.

Until the terms are announced, it would therefore be premature to say that SIA is legally obliged to participate.

But the reported wording certainly raises an interesting question.

If SIA invests another US$376 million, has it “lost” US$376 million?

Not quite.

If SIA subscribes approximately US$376 million for additional Air India equity, the subscription itself would not ordinarily constitute an immediate US$376 million expense. Instead, the additional investment would increase the amount of capital SIA has invested in its associate, subject thereafter to the applicable equity-accounting and impairment requirements.[6]

The real issue is risk exposure.

Return to our restaurant example.

You originally invest $200,000 in a restaurant.

Several difficult years follow. The restaurant then requires another $50,000 from you.

Writing that cheque does not mean you instantly lost $50,000.

But you now have $250,000 of capital exposed to the success or failure of the restaurant, rather than $200,000.

The question therefore becomes whether the restaurant will eventually generate sufficient economic returns to justify all the capital you have committed to it.

Air India is obviously vastly more complicated than a restaurant, but the underlying capital-allocation question is similar.

What does this mean for an SIA shareholder?

The main risks are straightforward.

First is earnings risk

If Air India continues suffering substantial losses, SIA may continue recognising its share of those losses through equity accounting.[6] That can continue depressing SIA’s reported earnings even without an additional impairment.

Second is capital-allocation risk

Every additional dollar committed to Air India is a dollar of SIA capital that cannot simultaneously be deployed elsewhere.

SIA could use capital for aircraft, its own operations, acquisitions, debt management, liquidity reserves or distributions to shareholders. An additional investment in Air India therefore has to be judged against alternative uses of that capital.

Third is valuation risk

Additional equity funding increases the amount of capital exposed to Air India.

If the turnaround succeeds, the value of SIA’s stake may ultimately justify that investment.

If Air India continues to underperform, however, SIA could continue recognising associate losses. And if the recoverable amount of its remaining investment eventually falls below its carrying amount, an impairment could become necessary.[5][6]

An additional subscription does not itself create an immediate loss.

It increases the size of the bet.

SIA shareholder cheat sheet

Item	Amount	What it means
SIA’s current ownership	25.1%	SIA already has a substantial economic stake in Air India
Original total cost recorded at 31 March 2025	Approximately S$2.096 billion	Includes the Vistara interest, subscriptions, subsequent capital injections and acquisition-related costs[3]
Carrying amount at 31 March 2026	Approximately S$1.135 billion	Amount remaining on SIA Group’s balance sheet after subsequent equity-accounting adjustments[5]
SIA’s share of Air India’s FY2025/26 losses	S$945.2 million	Losses recognised through SIA Group’s reported results[5]
Mathematical 25.1% share of proposed US$1.5 billion injection	Approximately US$376.5 million	An illustration, not an announced SIA commitment
Key unresolved issue	Funding terms	What happens if SIA declines to participate remains publicly unclear

The table does not answer whether SIA should invest.

It clarifies the question: SIA already has significant capital exposed, has already absorbed substantial losses through equity accounting, and may now be asked to commit another large sum to the turnaround.

But there is another side to the story

It would be equally simplistic to conclude that because Air India is presently loss-making, SIA’s investment must have been a mistake.

SIA did not invest in Air India merely for its current year’s earnings.

When the merger was announced, SIA described India as the world’s third-largest aviation market, with passenger traffic expected at the time to more than double over the following decade. SIA said the transaction would strengthen its multi-hub strategy and allow it to participate directly in India’s large and fast-growing aviation market. It also highlighted Air India’s valuable domestic and international airport slots and traffic rights.[2]

That strategic rationale remains relevant. SIA subsequently reiterated that the enlarged Air India strengthens its access to the Indian aviation market and supports its multi-hub growth ambitions.[8]

Turnarounds of this scale can also take years. Tata Sons Chairman N. Chandrasekaran has said Air India’s transformation should be viewed as a five-to-ten-year journey, citing persistent supply-chain disruption and the need to overhaul legacy systems, culture and fleet while building a larger technical and airline workforce.[9]

That strategic upside is real.

So are the present losses.

Both propositions can be true simultaneously.

Put the flags aside and follow the capital

It is easy for the Air India-SIA discussion to become political.

Air India carries the Indian flag. SIA carries the Singapore flag. SIA is also majority-owned by Temasek. Those ingredients make for an emotionally attractive narrative whenever hundreds of millions of dollars are involved.

But nationality does not tell us whether an investment creates shareholder value.

Neither does one bad financial year.

The more useful questions are considerably more mundane:

• How much capital has SIA committed?

• How much more might it have to commit?

• How much of Air India’s losses are flowing through SIA’s accounts?

• What is SIA’s remaining investment worth?

• And what returns must Air India eventually generate to justify the cumulative capital invested?

For now, we know that Air India has already imposed a substantial drag on SIA’s earnings. SIA recognised S$945.2 million of Air India losses in FY2025/26, while the investment was carried at approximately S$1.135 billion at 31 March 2026. Management nevertheless assessed its recoverable amount to be higher than that carrying value.[5]

We also know that Air India is reportedly seeking another US$1.5 billion from its shareholders, although the funding remains under discussion.[1]

What we do not yet know is equally important: the final subscription amount, whether SIA will participate, precisely what happens if it does not, how the respective shareholdings would be affected, and what rights or obligations under the shareholders’ arrangements govern this new funding request.

Those details will determine whether the next chapter represents additional strategic investment, defensive funding to preserve SIA’s position, or simply more capital being placed at risk while Air India attempts its turnaround.

That is ultimately how an investor should assess the issue.

Not Singapore versus India.

Not whether one likes or dislikes Air India.

Not whether US$1.5 billion sounds frightening in a headline.

Follow the capital, follow the losses, and eventually, follow the returns.

The basic question facing a shareholder remains surprisingly ordinary:

If I put another dollar into this business today, what must happen tomorrow for that dollar to have been worth investing?

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Sources

[1] Reuters, “Air India seeks $1.5 billion from owners Tata, Singapore Air as losses mount”, 25 August 2026.
Reuters report

[2] Singapore Airlines, “Singapore Airlines And Tata Sons To Merge Air India And Vistara, Creating India’s Leading Airline Group”, 29 November 2022. This is the principal contemporaneous SIA announcement setting out the INR20.585 billion investment, proposed 25.1% interest, potential INR50.2 billion additional funding commitment and strategic rationale.
SIA merger announcement

[3] Singapore Airlines Ltd, Annual Report FY2024/25, Note 25(b), “Acquisition of Air India Limited”. The audited financial statements record completion on 12 November 2024, the consideration transferred, subsequent capital injections, unchanged 25.1% interest and total investment cost of S$2.0955 billion.
SIA FY2024/25 Annual Report

[4] Singapore Airlines, “SIA Group Reports First Half Net Profit of $742 Million, Maintains Interim Dividend at 10 Cents Per Share”, 8 November 2024, p 5. SIA stated that its expected INR31.945 billion injection would maintain its 25.1% stake and that future capital injections would be considered based on Air India’s requirements and available funding options.
SIA November 2024 results announcement

[5] Singapore Airlines Ltd, Financial Statements FY2025/26, Independent Auditors’ Report, “Impairment of investment in Air India”. This records the S$1.1346 billion carrying amount, S$945.2 million share of Air India losses, impairment indicators, valuation work and conclusion that recoverable amount exceeded carrying amount.
SIA FY2025/26 Financial Statements

[6] IFRS Foundation, IAS 28 Investments in Associates and Joint Ventures, particularly paragraph 10 on the equity method. Under the equity method, the investment is initially recognised at cost and subsequently adjusted for the investor’s share of the associate’s profit or loss.
IAS 28 overview and requirements

[7] Singapore Airlines, FY2025/26 Results, Group Financial Results. Basic earnings per share were 38.4 cents for FY2025/26 compared with 89.3 cents for FY2024/25.
SIA FY2025/26 results presentation

[8] Singapore Airlines, Annual Report FY2024/25, describing the completed Air India-Vistara merger as strengthening SIA Group’s access to one of the world’s fastest-growing aviation markets and supporting its multi-hub growth ambitions.
SIA FY2024/25 Annual Report

[9] Reuters, “Air India turnaround could take up to a decade, owner Tata Sons says”, 28 July 2026.
Reuters report on Air India turnaround