SIA shares tumble 7.4% after first-quarter profit slide

SINGAPORE – Shares of Singapore Airlines (SIA) slumped in morning trading on July 29 as the market reacted to the announcement of the group’s sharp drop in first-quarter earnings.

The shares fell as much as 8.6 per cent, or 65 cents, to $6.95 minutes after the opening bell.

This was the largest intra-day decline for SIA shares since August 2024.

The stock later pared losses to close down 7.4 per cent, or 56 cents, at $7.04.

A heavy 38.5 million shares changed hands.

SIA said after trading hours on July 28 that

net profit slid 59 per cent to $186 million for the three months to June

, down from $452 million in the corresponding period a year ago.

This was due to lower interest income and its share of losses of associates, it said.

Air India, in which SIA holds a 25.1 per cent stake, accounted for the bulk of losses from associates.

The Indian carrier’s financial performance was not included in the group’s results for the same quarter in 2024 as SIA began accounting for its share of Air India’s results only from December 2024 following the

full integration of Vistara into Air India.

CGS International analyst Raymond Yap said SIA underperformed due to the sizeable share of Air India’s losses, although the Singapore business did well.

He noted that SIA’s passenger and cargo businesses in Singapore continued to perform, with higher operating profit supported by lower fuel costs and depreciation of the US dollar.

He added that SIA could continue to be affected by the Indian carrier’s weak financial performance, in the light of the cuts made to its flights after the

fatal crash of Air India Flight 171 in June

.

DBS Bank analyst Tabitha Foo told CNBC that following the crash, Air India reportedly saw a 20 per cent drop in bookings across domestic and international routes, while average fares dropped 8 per cent to 15 per cent.

JP Morgan Securities Asia-Pacific’s Karen Li said SIA’s results would likely be deemed a major miss and downgraded the stock to neutral with a price target of $7.

But Morgan Stanley’s Divya Gangahar Kothiyal told Bloomberg News that SIA’s passenger yields may soon stabilise, which could help ease competitive sales pressures.

SIA and Scoot carried a record 10.3 million passengers during the quarter, up 6.9 per cent from a year ago.

But passenger yields – the amount earned per passenger for each kilometre flown – slipped 2.9 per cent to 10 cents per revenue passenger-km, due to heightened competition as more airlines continue to add capacity, SIA said.

OCBC analyst Ada Lim noted that SIA may be “nearing the end of the runway for exceptionalism”, after it posted a record performance for the last full financial year on the back of robust travel demand and a one-off, non-cash accounting gain on the disposal of Vistara.

This is given that passenger yields have peaked and are on a moderating trajectory as other airlines progressively return capacity to the market, especially in the region, she noted.

“Tariff uncertainty and global growth concerns may also weigh on travel demand and worsen supply chain disruptions,” she said.

But she added that SIA still holds long-term value for investors.

“We remain confident that SIA’s brand proposition, service quality and product innovation will allow it to navigate the volatility and transition from recovery to growth going forward,” she said.