Singapore Airlines has reported a steep fall in half-year net profit, with losses from its stake in Air India emerging as a major drag on the group’s bottom line. But the full story runs deeper: SIA’s own core business is also facing pressures that go beyond the Air India impact.
The SIA Group posted a net profit of S$239 million for the six months ended 30 September 2025, down from S$742 million a year earlier, representing a decline of S$503 million, or 67.8%.
In the second quarter alone, SIA posted a net profit of $52 million, a steep 82.1% year-on-year drop.
The Air India Factor
The sharp drop in SIA’s net profit was driven primarily by non-operating items.
SIA’s share of results from associated companies fell by S$417 million compared with a year earlier, almost entirely due to Air India’s losses. These losses were not included in the comparable period last year but are now fully reflected following the integration of Vistara into Air India in late 2024.
SIA also reported a S$103 million drop in interest income, reflecting lower cash balances and interest rate cuts, which compounded the impact of associate losses.
SIA owns 25.1% of the Air India Group, with Tata Sons holding the remaining 74.9%. The Indian carrier’s results were not included in SIA’s comparable period a year ago, making the year-on-year decline appear especially stark now that Air India’s losses are fully equity-accounted.
Air India’s financial weight
The drag on SIA’s earnings reflects the scale of Air India’s financial and operational challenges. The Air India Group remains in the middle of a multi-year turnaround, burdened by the cost of fleet renewal, integration, restructuring, technology upgrades, and service recovery.
Those challenges have been intensified by the June 2025 fatal crash, which killed more than 250 people and triggered intense regulatory scrutiny, reputational damage and further investment in safety, engineering and maintenance systems.
Amid rising losses, Air India has sought at least ₹100 billion (around US$1.1 billion) in new shareholder support from Tata Sons and Singapore Airlines.
For SIA, that means Air India’s losses now flow directly into its income statement, via the “share of results of associated companies” line, and any eventual recapitalisation will require additional financial commitment.
SIA Without Air India: A Core Business Under Strain
While Air India explains the bulk of the net profit decline, SIA’s own operating metrics suggest that the Group would still be facing margin pressure even if Air India’s numbers were stripped out.
Rising costs
While SIA’s operating profit for the half year inched up 0.9%, the underlying cost pattern shows a structural squeeze building beneath the surface.
For the six months to 30 September 2025, Group expenditure increased by S$170 million (+2.0%) to S$8.872 billion. Crucially:
- Non-fuel expenditure climbed S$353 million (+5.9%)
- Net fuel cost fell S$183 million (-6.7%)
This split matters. It shows that non-fuel costs are rising sharply, while the reduction in fuel expense is largely cyclical and outside SIA’s control. SIA explains that higher non-fuel expenditure was “driven by capacity growth and cost inflation”. The categories under non-fuel expenditure like staffing, aircraft ownership costs (including depreciation and leases), maintenance, and airport-related charges, are structural and not easy to trim.
Revenue growth is not keeping pace
On the revenue side, Group revenue rose just 1.9% to S$9.675 billion. The passenger business saw higher traffic with passenger load factor improving 1.3 percentage points to 87.7%. However, there was a 2.9% decline in passenger yields due to increased competition. Cargo flown revenue slipped 2.8% on weaker yields and slightly lower load factors.
In effect, SIA is carrying more passengers and cargo, but earning less per seat and per tonne, while non-fuel costs continue to rise.
A tightening margin, whether or not Air India is included
Against this backdrop, SIA still delivered a solid first-half operating profit of S$803 million, however, it’s important to note that:
- Non-fuel costs are growing faster than revenue
- Fuel savings are partly cyclical and partly offset elsewhere
- Yields are under pressure across both passenger and cargo segments
Even without Air India’s losses and the hit from lower interest income, these underlying trends warrant attention.
Air India’s consolidation has turned a slow squeeze into a headline collapse in net profit. But the deeper story lies in cost inflation, capacity-driven operating expenses, and softening yields, i.e. pressures that would be weighing on SIA’s margins even without Air India.
The message from this set of results is twofold: Yes, Air India is now a massive material drag on SIA’s reported earnings. But no, the story does not end there – SIA’s own cost and yield dynamics reveal a tightening profitability picture even before Air India enters the equation.
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