SINGAPORE – Singapore Airlines (SIA) is beginning to feel the strain of higher jet fuel prices as a result of the Middle East conflict, despite having raised air fares across its network.
In a May 14 filing on the Singapore Exchange, the airline warned that higher fuel costs have yet to fully feed through its operations, and expects the full effect to be reflected only in its next set of results.
Costs were manageable for the recent financial year ended March 31 however, helping the airline group post a 39 per cent year-on-year jump in operating profit to $2.4 billion.
This came on the back of record revenues, which rose 5 per cent year on year to a high of $20.5 billion. SIA and its low-cost subsidiary Scoot flew a total of 42.4 million passengers between April 1, 2025 and March 31, 2026, up 7.7 per cent from a year earlier as global demand for air travel remained robust.
But net profit fell 57.4 per cent to $1.2 billion over the period, primarily due to the absence of the $1.1 billion non-cash accounting gain recognised in November 2024 when SIA completed the Air India-Vistara merger.
SIA also swung from a share of profits from associated companies a year earlier to a loss of $846 million in the FY2025/26 financial year, as it had to account for a full year of losses from Air India in this set of results, compared with only four months previously.
Despite this, the Board has recommended a final ordinary dividend of 22 cents per share for FY2025/26, taking total dividends for the full year to 27 cents per share.
SIA said in Nov 2025 that it plans to return capital to shareholders through a special dividend package of 10 cents per share annually over three financial years, amounting to about $900 million over the period.
The Board proposed the second tranche of 7 cents per share for FY2025/26 to be paid on Aug 28 to those who are shareholders as of Aug 12, subject to approval.
Including the first tranche of 3 cents per share paid on Dec 23, 2025, the total special dividend for FY2025/26 will be 10 cents per share, representing a total special dividend distribution of $300 million for the period.
Committed to Air India’s transformation
Even as it returns capital to shareholders, however, SIA continues to face challenges tied to its investment in Air India.
The airline is grappling with industry-wide supply chain constraints, air space restrictions, constraints on operations to its key Middle East markets and elevated jet fuel prices.
In April, it reported losses amounting to 220 billion rupees (S$2.95 billion) for its financial year ended March 31, owing to a plunge in sales following the deadly crash of a Boeing 787 Dreamliner, the closure of Pakistani airspace to Indian carriers, and the Middle East conflict.
The embattled airline has reportedly suspended several international flights for three months from June due to soaring jet fuel prices, with cuts expected to affect key international routes from Delhi, including Chicago, Newark, Singapore and Shanghai.
Air India is also searching for a new chief executive after its former CEO Campbell Wilson resigned in April. In early May, it was reported that more than 1,000 employees were terminated over the past three years over ethical misconduct and policy violations.
Despite Air India’s challenges, SIA said it is committed to its 25.1 per cent investment in the Indian airline, calling it a “core component of its long-term multi-hub strategy”.
SIA said in its filing: “SIA is working closely with its partner Tata Sons to support Air India’s multi-year transformation programme.”
It added that Air India continues to make progress in its fleet renewal and aircraft retrofit program, initiatives to elevate the end-to-end customer experience, and improve its operational performance.
Higher fuel prices, airfares
This comes as SIA is also grappling with higher jet fuel prices across its own network.
The airline noted that jet fuel prices have more than doubled since the conflict began, adding significant cost pressures to its business.
SIA and Scoot have already raised air fares across their network, but SIA said “the adjustments do not fully offset the rise in the price of jet fuel, which is the Group’s single-largest expenditure item.”
It added that a prolonged conflict in the Middle East could disrupt supply chains and weaken economic conditions, potentially affecting travel demand.
Despite the challenging environment, the airline said it will continue to grow its fleet and passenger network.
In May and June, Scoot will deepen its presence in Indonesia with new direct services from Singapore to Belitung and Pontianak. Frequencies to Changsha in China, Okinawa in Japan, Phuket in Thailand, Sibu in Malaysia, Vienna in Austria, and Bali, Jakarta, Labuan Bajo, Lombok and Manado in Indonesia will also increase.
Meanwhile, SIA will adjust capacity on selected routes in line with demand patterns. It will add capacity to the United Kingdom, with London Gatwick services expanding to twice-daily between July 3 and Aug 29. Together with its services to London Heathrow, SIA will operate up to six-daily flights to the United Kingdom’s capital.
It will also start daily services to Hangzhou in June, making it SIA’s ninth destination in mainland China.
From Oct 25 to March 2027, SIA plans to increase capacity and frequencies on selected European routes, including London Gatwick, Milan and Munich.
But in view of the geopolitical situation in the Middle East, SIA and Scoot have suspended services to Dubai and Jeddah since Feb 28. SIA has also deferred the launch of its Riyadh services from June to September.
As of March 31, the Group’s operating fleet comprised 218 passenger and freighter aircraft. SIA operated 148 passenger aircraft and seven freighters, while Scoot operated 63 passenger aircraft.
The Group’s passenger network covered 134 destinations in 35 countries and territories as of March 31.
Shares of SIA closed flat at $6.27 on May 14, before its results were announced.
