Singapore Airlines (SIA) has around S$2.1 billion invested in Air India following the Vistara-Air India merger.

As of the last financial year, the carrying value of this investment had already fallen significantly and SIA recognised substantial losses from Air India’s weak performance.

Given Air India’s continued operational challenges, higher jet fuel prices and ongoing geopolitical uncertainties, further impairment risks or additional losses cannot be ruled out in the current financial year.

In my own view, Singapore investors holding SIA should be prepared for the possibility of another weaker earnings this financial year. At this stage, I do not see a near-term turnaround for Air India, especially with the aviation industry facing rising fuel costs and intense competition.