Singapore Airlines Profit Declines 82% Due to Air India Losses

Post by : Raina Nasser

Singapore Airlines (SIA) experienced a notable decline in earnings for the September quarter, largely attributed to escalating losses at Air India, where it holds a 25.1% share. This financial setback occurred even with strong passenger demand and record travel volumes across SIA’s extensive network.

Impact of Air India's Financial Struggles

SIA's net income for the quarter dropped 82% year-over-year, totaling S$52 million. The downturn is primarily due to the substantial losses at Air India, now reflected in SIA's financial statements after the initiation of equity accounting in December 2024, following the merger of Vistara into Air India.

In the first half of the financial year, SIA's share of results from affiliate companies fell by S$417 million, primarily owing to Air India's underperformance. The Indian airline has been grappling with rising expenses, operational demands, and a complex recovery path.

Tata Sons has reported that Air India’s consolidated losses escalated by 48% in FY25, reaching ₹10,859 crore, marking the highest deficit within all Tata Group companies. This financial pressure has intensified, even as India's aviation sector continues to grow.

Air India’s Challenges Amplified by Tragedy

Additionally, Air India is navigating the repercussions of a devastating crash in June that resulted in 260 fatalities—one of the most severe aviation disasters in recent memory. This incident has increased both operational and financial burdens, leading the airline to seek over ₹10,000 crore in assistance from Tata Sons and Singapore Airlines.

During FY25 alone, the two partners provided ₹9,558 crore for capital improvements and restructuring, with SIA contributing a notable share.

SIA's Investment Philosophy Remains Strong

Despite current losses, SIA reiterated its steadfast commitment to Air India, viewing the investment as integral to its multi-hub strategy. Gaining access to India’s burgeoning aviation sector is a long-term focus for the enterprise.

Air India has initiated a five-year overhaul plan aimed at renewing its fleet, integrating operations, and enhancing services. SIA affirmed it will continue to support these initiatives as the airline embarks on its recovery journey.

Robust Performance Beyond Air India Issues

Without the burden of Air India’s losses, SIA’s other financials remained strong. The group observed a 2.2% increase in quarterly revenue to S$4.9 billion, fueled by consistent demand for air travel.

The airline transported a record 10.5 million passengers during the quarter. Furthermore, both SIA and its budget subsidiary Scoot recorded high occupancy rates, with Scoot achieving load factors exceeding 90% for six consecutive months, benefitting from the shutdown of Jetstar Asia in July.

Operating profits rose almost 23% to S$398 million, bolstered by decreasing fuel costs and stable operating expenditures. Conversely, passenger yields fell by 3% to 9.8 Singapore cents per kilometer.

Forward Outlook: Positive Demand but Ongoing Risks

SIA anticipates sustained travel demand moving into the third quarter; however, the persistent financial challenges stemming from Air India pose a significant risk to overall earnings. The success of Air India's transformation will be pivotal in ascertaining SIA’s future profitability.