Singapore Airlines hurt by Air India losses; investment could pay off

Singapore Airlines has seen Air India’s earnings decline for nearly five quarters, but analysts and the airline say the investment will pay off in the long run.

SIA reported on Thursday SIA said it achieved record revenue of 20.5 billion Singapore dollars ($16.06 billion) in the financial year ended March 31, as operating profit rose 39% to SG$2.38 billion, driven by higher demand, higher efficiency and lower full-year net fuel costs.

However, net profit fell 57.4% year-on-year to SG$1.18 billion, mainly due to Air India’s losses and accounting gain in the previous year.

Air India faces numerous hurdles: Pakistan’s airspace closed in April 2025, followed by Flight 171 crashing in June, killing more than 250 people.

Now, the Iran war and the carrier’s exposure to the Middle East market are wreaking havoc, forcing the airline to cancel almost a third of its flights during its peak travel period from June to August.

“These changes aim to improve network stability and reduce last-minute inconvenience to passengers,” Air India said. he said.

Independent aviation analyst Brendan Sobie said SIA’s venture into India’s fast-growing aviation market was strategic and “strategic usually means unprofitable”. “But frankly, last year was worse than anyone could have imagined.”

CEO Goh Choon Phong said at Friday’s earnings briefing that SIA would continue to support Air India, which he said was making “tangible progress” on its transformation program in areas such as staff training and reducing customer complaints.

“It’s going to be a long game. There are no shortcuts,” he said.

Vistara will merge with Air India in December 2024, giving SIA a 25.1% stake in India’s flag carrier. SIA injected as part of deal S$360 million in cash transferred to Air India and commitment to contribute up to S$880 million as additional capital in the future.

Air India is seeking financial support of at least 100 billion rupees (S$1.47 billion) from SIA and Tata. A Bloomberg report in April.

Asked whether SIA would inject any additional capital into Air India, Goh declined to comment, saying it would be “a discussion we will have to have with our fellow shareholders”.

But it can be difficult to avoid.

“Given the magnitude of losses and ongoing operating pressure, the capital required in this round will likely be meaningfully higher than initially expected,” DBS Group Research analyst Jason Sum said before the results were announced.

Speaking to Squawk Box Asia on Friday, Sobie said SIA “will definitely need to put in more money. There’s no doubt about it. It’s just a matter of how much and when.”

Sum said a larger-than-expected capital injection would start to constrain dividend capacity as SIA faces rising earnings pressure.

Sumit Agarwal, a professor at the National University of Singapore, said SIA will be inundated with cash for years because of Air India, so there is a possibility it could sell its shares in Air India to Tata or another buyer.

But Agarwal said India is pouring money into new and improved airports as well as other infrastructure, so “it’s a good bet to be in this market.” “There is demand.”

“I think this will pay off for Singapore Airlines” in the long run, he added.