SINGAPORE – High fuel costs continued to weigh on Singapore Airlines’ earnings, as the airline reported on Nov 11 a 43.9% slump in net profit to $134 million for the first half of its 2027 financial year.
This was despite a 16.8% rise in revenue for the first half to $11.3 billion, driven by stronger demand for both passenger travel and air cargo.
The group noted strong seasonal travel demand and said cargo demand remained firm, supported by shipments linked to semiconductors and cloud computing. Geopolitical and weather-related disruptions to sea freight also prompted some shippers to switch to air freight.
SIA had a strong second quarter, with operating profit up 16.3% year on year to $463 million and net profit quadrupling to $210 million over the same period.
This came on the back of a 14.3% year on year increase in total revenue to $5.6 billion.
Still, the carrier’s total expenditure rose by 14.1% to a hefty $5.1 billion over the same period. This was mainly due to a surge in fuel prices as a result of the war in the Middle East, with the group’s fuel costs before hedging rising 63.3% to $2.1 billion during the quarter.
The group declared a total dividend of seven cents per share for the first-half, comprising an interim two-cent ordinary dividend and five-cent special dividend.
While it has adjusted air fares and cargo rates to overcome complexities in its operations and supply chains, these measures do not fully offset the impact of sustained high fuel prices, SIA said.
It added that an extended Middle East conflict “could also have spillover effects on broader macroeconomic conditions, potentially leading to further inflationary cost pressure and affecting demand for passenger travel and air freight”.
Nevertheless, the group remains in a strong position to navigate this volatility, with a diversified global network and broad mix of traffic flows helping to cushion shifts in demand. Additionally, the complementary positioning of SIA and its low-cost carrier Scoot enables the group to serve different markets and customer segments, and adjust capacity and schedules where needed.
Despite the global airline industry facing headwinds from the conflict, the company reported a 4.9% increase in passenger capacity for the first half of its financial year.
It cited Scoot’s network expansion in fast-growing Asia Pacific markets, exclusively operating routes to 58 of the 84 destinations that it serves.
With uncertainty still looming over the Middle East, both SIA and Scoot will continue to suspend their flights to the region. SIA’s services to Saudi Arabia’s capital Riyadh, which was supposed to launch in June, have now been deferred to March 2027.
SIA said its first-half net profit was also partially cushioned by a lower share of losses from Air India and other associated companies.
It added that Air India, whose substantial financial losses over the years have weighed on SIA’s performance, has made “tangible progress in its multi-year transformation, including enhancements to customer experience and operational performance”.
SIA has a 25.1% stake in the Air India Group, and noted that a large-scale transformation of the airline would take time.
It said it will work with majority partner Tata Sons “to support Air India’s journey towards profitable growth, including strengthening structural cost efficiencies, unlocking greater synergies between Air India and Air India Express, sharpening its commercial strategy to navigate current external challenges elevating its customer proposition”.
Following the signing of a commercial cooperation agreement in January, Air India and SIA in October launched additional flight options between Singapore and eight Indian cities through the airlines’ respective booking channels, greater flexibility and a more seamless booking experience, the carrier said.
It reiterated its commitment to its investment in Air India, which remains a key part of its multi-hub strategy.
SIA’s shares closed at $7.17 on Nov 11, up 0.8%, before it announced its earnings.
