SINGAPORE: Singapore’s government defended Singapore Airlines’ stake in Air India yesterday, saying the flag carrier must expand overseas to grow and the investment’s outcome was for the company and its shareholders to judge.
The remarks, made in parliament, cap two weeks of public scrutiny over a request by Air India for about US$1.5 billion (RM6.1 billion) of fresh equity from owners Tata Sons and Singapore Airlines that was first reported by Reuters.
An opposition lawmaker objected to using any funds from Temasek, the state investor that majority-owns Singapore Airlines, to back the Indian carrier. Temasek then publicly supported Singapore Airlines, which holds a 25.1% stake in Air India.
Singapore’s Prime Minister Lawrence Wong on Sunday condemned anti-Indian abuse online that accompanied the debate, a day after Senior Minister K. Shanmugam asked police to examine racist comments about the Air India investment and Singaporeans missing in flash floods in Nepal.
Responding to a question in parliament, Transport 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.
“Building globally competitive companies means entering potentially difficult markets against people who got there first and staying the course when there is turbulence,“ Siow said. “We cannot have it both ways. We cannot tell our companies to go out and compete, and then treat every tough year abroad as proof that they should stay home.”
Singapore Airlines’ stake in Air India has weighed on its earnings, with the Indian airline group’s losses widening to US$2.33 billion in the year to March during a multibillion-dollar turnaround that could take up to a decade.
Siow said many overseas investments would not necessarily produce immediate returns and it was for Singapore Airlines and its shareholders to decide whether the investment in Air India would prove valuable.
“Air India’s losses do not automatically become SIA’s (Singapore Airlines’) liabilities. Neither does the capital request from Air India oblige SIA to provide it,“ he added.
Singapore Airlines said in a statement yesterday 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 yesterday.
On Saturday, 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.
“That news (of the funding request) has given rise to a whole series of anti-Indian, racist ranting online,“ Shanmugam said, adding that Temasek’s CEO and senior management had been attacked over their ethnicity.
Temasek did not respond to a request for comment on his remarks.
Tiong told parliament he categorically rejected racism and xenophobia, and noted his questions had been about a purely commercial matter. – Reuters
