Singapore Airlines’ Profit Falls 44% as Fuel Costs Outrun Revenue Growth

Singapore Airlines reported net profit of S$134 million (about US$104 million) for the six months ended September, down 43.9% from a year earlier, according to the airline’s results as reported by The Straits Times and Nikkei Asia. Revenue rose 16.8% to S$11.3 billion (about US$8.8 billion), leaving a sharp gap between sales growth and earnings.

The cost of jet fuel was the principal pressure. Channel News Asia reported that the group’s fuel costs before hedging rose by more than 90% over the half-year as average jet fuel prices climbed 86.7% year on year. Hedging gains of S$806 million (about US$629 million) partly cushioned the increase, according to The Business Times. The airline said higher fares and cargo rates had not fully offset sustained fuel costs.

Results improved in the second quarter. The Business Times reported net profit of S$209.7 million (about US$164 million), compared with S$52.4 million (about US$41 million) a year earlier, while operating profit rose 16.3% to S$463.7 million (about US$362 million). The Straits Times reported that quarterly fuel costs before hedging still rose 63.3% to S$2.1 billion (about US$1.6 billion).

“Earnings continue to reflect the weight of higher jet fuel costs that can't be fully passed through to customers,”Lorraine Tan, director of Equity Research, Asia at Morningstar

Demand provided a counterweight. The Business Times reported record first-half passenger carriage of 21.8 million, while The Straits Times said cargo demand was supported by semiconductor and cloud-computing shipments. The Business Times reported that a weaker first quarter weighed on half-year earnings as higher jet fuel prices hit operating profit.

Singapore Airlines’ investment in Air India also affected the comparison. Channel News Asia reported that the group’s share of Air India’s losses narrowed to S$361.7 million (about US$282 million) from S$429.5 million (about US$335 million) a year earlier. The Straits Times reported that Singapore Airlines holds 25.1% of the Air India Group.

For travellers, the airline said its flights to the Middle East, including those operated by its low-cost carrier Scoot, remained suspended, The Straits Times reported. A planned Singapore Airlines service to Riyadh has been deferred to March 2027. The group declared ordinary and special interim dividends totalling seven Singapore cents a share, according to The Straits Times and The Business Times.