Singapore Airlines stock fall after first-quarter profit declines

Shares of Singapore Airlines plunged after the carrier reported a 59% decline in earnings for the first quarter of its financial year.

SIA stock fell more than 8% and logged the largest intra-day decline since August 2024, data from LSEG showed. It is currently trading 7.11% lower.

Net profit fell to 186 million Singapore dollars ($144 million) for the quarter ended June 30, according to the company’s earnings report. The drop was attributed to reduced interest income and losses from its associates.

Its operating profit in the first quarter also fell 13.8% to S$405 million year over year.

“In addition to the lower operating profit, the reduction in net profit was largely attributable to a lower interest income on the back of lower cash balances and interest rate cuts, and the Group recording a share of losses of associated companies compared to a share of profits for the same quarter last year,” SIA said in its earnings statement.

Singapore’s flagship carrier also noted that the loss stemmed from Air India’s financials, which were not included in the group’s results for the same quarter in 2024.

Singapore Airlines began equity accounting for Air India from December 2024, after Vistara was fully merged into the airline. SIA now holds a 25.1% stake in Air India.

However, SIA noted that demand for air travel and cargo remained strong despite geopolitical uncertainties.

“The demand for air travel remains healthy in the second quarter of FY2025/26 across most route regions due to the traditional summer peak,” the company noted. However, the global airline industry continues to grapple with a “volatile” operating environment, including geopolitical developments.

SIA noted that while tariffs stemming from the U.S. trade war have led to unpredictable and uncertain demand for its cargo business, its “diversified network and verticals reduce its exposure to specific regions or market segments.”

“The SIA Group is well-positioned to maintain its industry-leading position, thanks to its robust foundations – a strong balance sheet, digital capabilities, and a talented and dedicated workforce,” the flag carrier of Singapore added.

However, Maybank cited SIA’s weaker cargo demand and higher operating costs as reasons for reducing its profit estimates for the carrier by 25–29% over the next three years.

“We think the share price has run ahead of its fundamentals and downgrade SIA to SELL,” said Maybank’s investment analyst Eric Ong, who added that the stock still looks “too expensive” relative to the firm’s actual performance.

Maybank’s fresh target price is S$6.75 per share, compared to its current price of S$7.08.