Singapore Airlines Profits Plummet as Air India Losses Weigh Heavily

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Singapore Airlines (SIA) has revealed a steep decline in its half-year net profit, reporting only S$239 million for the six months ended September 30, 2025 — a drop of 67.8% compared to S$742 million over the same period last year.

This profit drop has rattled investors and underscored challenges linked to its 25.1% stake in Air India, along with rising costs and macroeconomic headwinds.

What’s Driving the Profit Slump?

1.

Air India Losses Hit Hard

A key factor in SIA’s earnings decline is its exposure to Air India. SIA began equity-accounting for Air India’s results in December 2024 after Vistara — SIA’s joint-venture airline — was fully merged into Air India.

In the latest reporting period, SIA recorded a S$417 million drop in its share of results from associated companies, largely driven by Air India’s poor financial performance.

Business Standard highlights how SIA describes this as part of its “long-term multi-hub strategy,” investing in one of the fastest-growing aviation markets despite short-term losses.

2.

Reduced Interest Income

SIA’s earnings were also hurt by a S$103 million decline in interest income, largely due to lower cash balances and cut interest rates.

This drop in non-operational income compounded the company’s earnings pressure and squeezed its bottom line.

3.

Cost Pressures & Inflation

Total expenditure rose by S$170 million, driven by capacity expansion, inflationary cost increases, and other non-fuel overheads, according to SIA’s financial disclosures.

Interestingly, SIA’s net fuel costs actually fell during the period — a silver lining — but the savings were more than offset by surging non-fuel costs.

According to its interim results, the company achieved an operating profit of S$803 million, showing some operational resilience despite the sharp net profit decline.

4.

Dividend Moves

To reassure shareholders amid the profit fall, SIA declared an interim dividend of 5 Singapore cents per share, as well as an interim special dividend of 3 Singapore cents.

Their board has also approved a special three-year dividend plan, aiming to return about S$900 million in total over that period.

Strategic Implications & Risks

A.

Long-Term Bet on Indian Market

SIA’s continued commitment to Air India reflects a bold bet on India’s aviation growth. While the losses are painful now, SIA appears to be backing its 25% stake as a long-term strategic investment rather than a short-term trade.

That said, the short-term financial drag raises questions: How long can SIA absorb these losses? And when will Air India’s turnaround begin to deliver positive cash flow?

B.

Sector Volatility & Competitive Pressures

The airline industry is undergoing rebalancing. SIA’s profit warning aligns with analyst views that passenger yield pressure, capacity build-out, and macro risk are reshaping how global carriers must operate.

For SIA specifically, increasing competition in key markets, fuel/maintenance cost rises, and reduced non-operating income are all combining to stretch margins significantly.

C.

Financial Strength Tested

SIA’s balance sheet remains strong, but the cash burn risk and declining interest income could reduce its financial flexibility over time. According to its most recent annual report, the airline used billions in cash — partly tied to its Air India investment.

If Air India’s turnaround is delayed, SIA may need to reassess how much further capital it pours into the Indian airline.

D.

Shareholder Confidence & Market Reaction

Investors are likely to monitor how effectively SIA manages its exposure to Air India without sacrificing its global growth ambitions. The special dividend program is a move to appease shareholders, but long-term profitability will depend heavily on Air India’s performance and cost discipline at SIA.

What to Watch Going Forward

1. Air India’s restructuring outcomes — Will SIA’s associate startup begin reporting profits, or will losses continue?

2. SIA’s cost management — Can SIA rein in non-fuel costs, or will inflation and expansion erode profits further?

3. Dividend execution — How will the three-year special dividend package play out, and what does it say about SIA’s cash flow outlook?

4. Interest rate environment — If rates stay low, SIA’s interest income may remain weak. But rising interest rates might help future earnings.

5. Fuel hedging strategy — Fuel volatility is back in airline headlines; how will SIA hedge risk moving forward?

6. Investor sentiment — Will the market respond positively to SIA’s long-term Indian bet, or penalize it for current losses?