Air India woes could drag Singapore Airlines’ earnings for years, analysts

Shares of Singapore Airlines slipped 3% on Friday as analysts warned that persistent losses at Air India could weigh on the group’s earnings, following a steep quarterly profit miss.

Singapore Airlines, also known as SIA, reported an 82% plunge in second-quarter earnings on Thursday. Net profit for the first half of the fiscal year also fell to 239 million Singapore dollars, down 67.8% from a year earlier, the company said.

However, the city-state’s flag carrier announced that it would pay a special dividend of 10 Singapore cents per share annually over three financial years, amounting to about 900 million Singapore dollars. An interim dividend of 5 Singapore cents per share for the half-year ended Sept. 30 would also be paid on Dec. 23.

SIA’s profitability will likely remain subdued in the near term due to Air India-related losses, combined with yield pressures and volatility in the cargo market, Tabitha Foo, an equity research analyst at DBS Bank, told CNBC.

“Given the scale of its restructuring, meaningful profit recovery for Air India will likely take time, weighing on SIA’s earnings through FY26-27,” she told CNBC in an email.

Here’s how the carrier performed in the three months ended September compared with LSEG SmartEstimates, which are weighted toward forecasts from analysts who are more consistently accurate: 

• Revenue: 4.89 billion Singapore dollars ($3.76 billion) vs. 4.94 billion Singapore dollars expected
• Net profit: 52 million Singapore dollars vs. 181.47 million Singapore dollars expected

Interest income in the second quarter fell by 42 million Singapore dollars due to interest rate cuts and lower cash balances from dividend payouts and loan repayments. The share from associated companies, including Air India, took a 295 million Singapore dollar hit in the period.

SIA holds a 25.1% stake in Air India following its November 2024 merger with Vistara, co-owned with India’s Tata Sons. SIA began equity accounting for the airline from December 2024.

“Despite the ongoing challenges, the SIA Group remains committed to working with its partner Tata Sons to support Air India’s comprehensive multi-year transformation programme,” the carrier said in a statement.

Air India also weighed on the group’s results in the previous quarter. It was reportedly seeking at least 100 billion rupees ($1.1 billion) in financial aid from SIA and Tata Sons, after a June crash that killed more than 240 passengers, according to Bloomberg.

Any financial support, earmarked for system upgrades and in-house engineering and maintenance capabilities, would be proportional to ownership, Bloomberg reported, citing people familiar with the matter.

Lorraine Tan, director of equity research at Morningstar, said investors need clarity on…