SIA subsidiary draws up new partnership with Air India

SINGAPORE: SIA Engineering Company (SIAEC) and Air India have signed a memorandum of understanding (MOU) to explore new opportunities in India’s aircraft maintenance, repair and overhaul (MRO) sector, including the possible establishment of a joint venture.

Air India is an associated company of Singapore Airlines, which holds a 25.1% stake in the carrier. Singapore Airlines is also the controlling shareholder of SIAEC.

The proposed collaboration will examine ways to strengthen MRO capabilities in India while supporting the country’s ambition to become a global aviation maintenance hub. It will also look at meeting the rising maintenance requirements of airlines operating in India and across the wider region.

The latest MOU builds on an existing working relationship between the two companies. In February 2024, SIAEC signed a 12-year agreement to provide component support for Air India’s Airbus A320 fleet. That was followed in May 2024, when SIAEC was appointed as Air India’s strategic base maintenance partner in Bangalore.

SIAEC chief executive officer Chin Yau Seng said the new agreement marks another step in expanding cooperation between the two companies.

“The proposed partnership with Air India builds on our existing collaboration,” he said, “In exploring further options for collaboration with Air India, SIAEC aims to leverage its technical expertise to jointly develop an MRO partnership that will play an integral role in Air India’s pursuit of operational excellence and potentially serve customers both within and outside the country.”

Air India chief executive officer and managing director Campbell Wilson said the country’s fast-growing aviation industry has made the expansion of domestic maintenance capabilities increasingly important.

“India’s rapid aviation growth is driving the need for a stronger, more self-reliant MRO ecosystem within the country,” he said, “As fleet sizes expand and operations scale up, developing local maintenance capacity will be important to support efficiency, resilience and long-term growth.”

Both companies stressed that the MOU is non-binding and does not commit either party to a final agreement. SIAEC said it will provide further updates should the discussions result in any material developments.

The move is being seen by observers as another symbol of SIA’s commitment to Air India despite the drag the Indian carrier has had on SIA Group’s earnings for about five consecutive quarters.

In May, SIA reported record revenue of SG$20.5 billion for the financial year ended 31 March, driven by stronger passenger demand, improved yields and lower full-year net fuel costs. Operating profit rose 39% to SG$2.38 billion.

Despite the strong operating performance, the airline’s net profit fell 57.4% year on year to SG$1.18 billion. The decline was attributed mainly to Air India’s losses, as well as an accounting gain recorded in the previous financial year.

Air India posted a loss of SG$3.56 billion, or about US$2.8 billion, substantially higher than the US$2.4 billion loss forecast by Bloomberg in April. SIA’s share of that loss amounted to SG$945.2 million.

Even so, SIA has made clear that it remains committed to supporting Air India’s turnaround.

Speaking at the airline’s earnings briefing in May, Chief Executive Officer Goh Choon Phong said Air India had made “tangible progress” in its transformation programme but cautioned that the recovery would take time.

“It is going to be a long game. There is no shortcut,” he said, adding that SIA would continue to support its Indian partner.