Singapore Airlines (SIA) has been downgraded from “Hold” to “Reduce” by CGS International, following a disappointing first quarter of the financial year 2026 (1QFY26). The downgrade comes as SIA’s core net profit fell by 56% quarter-on-quarter to S$186 million, largely due to its 25.1% stake in Air India, which reported significant losses. Despite strong performance in its Singapore passenger and cargo operations, the airline’s share price is expected to face pressure.
The report highlights that SIA’s Singapore operations achieved a 42% increase in operating profit to S$405 million, driven by robust passenger volumes and lower fuel costs. However, Air India’s losses, amounting to S$130 million for SIA, overshadowed these gains. The losses were exacerbated by the aftermath of a 787-8 crash in Ahmedabad, India, on 12 June 2025, leading to a reduction in Air India’s flight operations.
CGS International has adjusted its target price for SIA to S$6.80, down from S$6.88, reflecting a 10.5% downside from the current share price of S$7.60. The report advises investors to take profit before the 30 Singapore cents final dividend per share ex-date on 8 August 2025, noting that SIA’s share price historically drops post-dividend.
Looking ahead, SIA’s financial outlook remains challenging, with projected losses from Air India expected to widen in the coming fiscal years. Whilst Air India plans to restore flights by October 2025, the recovery in demand and pricing may take longer. Potential catalysts for SIA’s share price include a faster-than-expected recovery for Air India, though current valuations suggest limited upside.
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