STAKEHOLDERS NEED REASSURANCES
This argument alone will not convince stakeholders, especially those who already think SIA should cut its losses.
If it coughs up the cash, SIA should attach more conditions to the injection, such as more control and oversight over Air India’s strategy and operations. To enhance reliability and quality of service delivery, SIA could also demand that AI buy into its maintenance, repair and overhaul capabilities, and service standard offerings.
Reports from India suggest that moves are already underway in this direction, and that SIA officials are taking a more hands-on approach to operations.
SIA shareholders would also want more reassurance about any intervention – whether there is any matrix or timeline to measure recovery, or an exit strategy. They will want to know whether, and for how long, Air India will be an overhang on SIA's share price.
Another safeguard could be for funding to be limited and proportionate to performance recovery.
Also, SIA will need to be upfront about what this potentially huge capital injection means for its own financial resilience, especially given the Iran war's impact on fuel and demand.
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