Singapore Airlines has reported a significant decline in its net profit for the first quarter of the financial year 2026, with figures showing a 59% year-on-year decrease to SGD186 million. This drop is largely attributed to lower interest income and substantial losses from its associate, Air India. Despite a 1.5% increase in revenue to SGD4.79 billion, driven by record passenger volumes, the airline’s bottom line was heavily impacted by Air India’s performance, according to a DBS Research report.
SIA’s operating profit for the quarter stood at SGD405 million, a 14% decrease from the previous year, yet it remained in line with expectations. The airline’s passenger yield fell by 2.9%, with Scoot experiencing a sharper decline of 4.7%. Cargo operations also faced challenges, with yields dropping by 4.4%.
The airline has maintained its “HOLD” rating, with a revised target price of SGD6.50, up from SGD6.40. This adjustment reflects a 9% increase in forecasted operating profits for FY26, attributed to higher passenger load factors. However, net profit estimates for FY26 and FY27 have been reduced by 12% and 8%, respectively, due to the ongoing issues with Air India.
Air India’s restructuring and reputational challenges continue to pose a significant risk to SIA’s financial performance. The airline’s management has acknowledged the uncertainty surrounding Air India’s path to profitability, particularly following a recent incident that led to a 20% drop in bookings and a decline in average fares.
Looking ahead, DBS Research anticipates continued pressure on yields, although the rate of decline is expected to moderate. The airline is also facing inflationary pressures, which are likely to drive up ex-fuel unit costs. Despite these challenges, SIA remains committed to its premiumisation efforts, with a SGD1.1 billion investment aimed at enhancing its service offerings by 2030.
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