At first glance, the latest financial disclosures from Singapore Airlines (SIA) suggest a carrier in retreat. The headline figure is stark: the group’s net profit for the second half of the fiscal year ending March plummeted by 53.6 per cent, falling to S$945.5 million from S$2 billion a year earlier.
However, for those of us who have spent years parsing balance sheets, the “fall” is largely an accounting mirage. The decline in SIA H2 FY2026 earnings is primarily the result of a high baseline set last year by a one-time, non-cash accounting gain of S$1.1 billion stemming from the disposal of Vistara. Strip away that one-off event, and a very different story emerges—one of record-breaking operational growth and a passenger market that remains remarkably resilient.
While the bottom line took a hit, the engine of the business is humming. SIA posted a record revenue of S$10.8 billion for the second half, an 8 per cent increase year-on-year. Even more telling is the operating profit, which surged 72 per cent to hit a high of S$1.6 billion. In plain English: the airline is making more money from flying planes than it ever has before; it just didn’t have another billion-dollar windfall to pad the final tally this time around.
The Operational Engine: Passengers and Yields
The growth is being driven by a potent combination of more people flying and a willingness to pay more for the privilege. Passenger flown revenue rose 8.5 per cent, a result of a 4.7 per cent increase in traffic coupled with 3.8 per cent stronger yields. This suggests that the post-pandemic “revenge travel” phase has evolved into a sustainable, high-value demand for premium travel.
It hasn’t been a clean sweep across all sectors, however. Cargo flown revenue dipped 1.3 per cent, weighed down by a 3.5 per cent decline in yields. The cargo boom that sustained airlines during the pandemic has long since cooled, and SIA is now navigating a more normalized, competitive freight environment.
The group’s expenditure rose slightly by 1.6 per cent. While non-fuel costs climbed 5 per cent—driven by capacity expansion and general inflationary pressures—this was partially offset by a favorable swing in fuel hedging. In FY2025, the group faced hedging losses; in FY2026, those turned into gains, providing a crucial buffer against rising costs.
Financial Snapshot: H2 FY2026 vs. H2 FY2025
| Metric | H2 FY2026 | H2 FY2025 | Change |
|---|---|---|---|
| Net Profit | S$945.5 Million | S$2 Billion | -53.6% |
| Revenue | S$10.8 Billion | S$10 Billion (approx) | +8% |
| Operating Profit | S$1.6 Billion | S$0.93 Billion (approx) | +72% |
| Passenger Traffic | — | — | +4.7% |
The Air India Complexity
One of the more complex narratives in these results is SIA’s strategic bet on India. The airline holds a 25.1 per cent stake in the Air India-Vistara venture. While the merger is a long-term play for the world’s fastest-growing aviation market, the short-term accounting is painful.
SIA accounted for its share of Air India’s full-year losses, which amounted to S$945.2 million. This created a significant swing from the previous year, where only four months of the venture were recognized. Full-year net profit for the group declined 57.4 per cent to S$1.2 billion.
Management has also flagged “indicators of impairment” for the investment in Air India, citing geopolitical uncertainty and challenging operating conditions. With a carrying amount of S$1.1 billion against a total cost of S$2.1 billion, the venture is currently a drag on the balance sheet, even if it remains a critical piece of SIA’s global growth strategy.
Fuel Volatility and Geopolitical Risks
Looking ahead, the most immediate threat to profitability is not the balance sheet, but the fuel tank. Jet fuel is the single largest expense for any airline, and prices have more than doubled since February 28, following escalations in the Middle East involving the US, Israel, and Iran.
SIA and its low-cost arm, Scoot, have already raised fares across their networks to combat this. However, the airline warned that these adjustments do not fully offset the price spike. Because of pricing lags, the full impact of these higher costs is not yet fully reflected in the March figures; instead, the group expects the brunt of the impact to feed through in FY2027.
Beyond fuel, the airline is grappling with a “high-inflation operating environment.” Suppliers are raising prices due to energy costs and disrupted supply chains. While SIA has managed to pivot capacity to capture demand in Europe and Australia, the duration of the Middle East conflict remains a wild card that could affect both operational costs and global travel demand.
Rewards for Shareholders and Staff
Despite the dip in net profit, the board is signaling confidence through aggressive payouts. The group has recommended a final ordinary dividend of S$0.22 per share. When combined with the interim dividend of S$0.05 and a proposed special dividend package of S$0.10 per share annually over three years, the total dividend for FY2026 stands at S$0.37 per share.
The generosity extends to the tarmac and the cabin as well. Eligible employees are set to receive a profit-sharing bonus of 5.7 months for the fiscal year, a move designed to retain talent in a tight global labor market for aviation professionals.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice.
The airline’s focus now shifts to the FY2027 horizon, where the interplay between rising fuel costs and the integration of the India venture will determine if the record-breaking operational momentum can be translated back into bottom-line growth. The next major checkpoint will be the group’s quarterly updates and the continued monitoring of jet fuel price volatility.
Do you think SIA’s bet on Air India is a strategic masterstroke or a financial liability? Share your thoughts in the comments below.
