SIA shares fall on net profit drop; analysts expect Air India losses to continue

[SINGAPORE] Shares of flag carrier Singapore Airlines (SIA) fell as much as 3.6 per cent on Friday (Nov 14) after it reported an 82.1 per cent drop in net profit.

The counter fell as low as S$6.41 after the market opened, having closed at S$6.65 on Thursday, before the results were announced. As at the midday trading break, the shares were down 2.3 per cent at S$6.50.

For the second quarter of FY2026 ended September, SIA posted a net profit of S$52 million, down from S$290 million in the year-ago period.

The group attributed the drop to Air India, in which it holds a 25.1 per cent stake. The Indian flag carrier is undergoing a fleet renewal and cabin retrofit process, helmed by former Scoot CEO Campbell Wilson.

However, SIA’s quarterly operating profit, which excludes results from associated companies, rose about 23 per cent to S$398 million.

Air India was struck by tragedy in June, when Flight 171 crashed upon takeoff from Ahmedabad. Investigations into the fatal accident are ongoing.

At a results briefing on Friday, SIA CEO Goh Choon Phong said his airline has offered its expertise and help to Air India whenever it has been needed and appropriate.

He added that the investment into Air India is “long-term” and SIA remains “very committed”.

CGS International (CGSI) in a note on Friday maintained its “reduce” rating on the stock and dropped its price target to S$5.60 from S$6.80.

It pointed to analyst expectations of a “significant” cut in earnings-per-share forecasts, and a potential cash call by Air India.

CGSI analysts, citing a Bloomberg report, said that Air India is seeking S$1.5 billion in financial support from its shareholders, with SIA’s implied 25.1 per cent share at S$369 million.

“Although SIA did not mention this in its earnings release, and the sum is modest relative to SIA’s cash and cash equivalents balance of S$9.1 billion as at Sep 30, 2025, we think that SIA will still have to take this into consideration when deciding on the total annual dividend-per-share payouts,” CGSI analysts wrote.

“We reiterate ‘reduce’ due to the wider-than-expected Air India losses, which may be persistent,” they added.

Citi analysts noted that SIA actually experienced stabilising passenger yield and operating cost per available seat kilometre (excluding fuel).

However, they still forecast further downside from Air India’s losses, which could “take a few years to reach break-even”.

They reiterated a “sell” call with a S$6.15 target price, noting that the group’s special dividend of S$0.10 per share (to be paid annually over three financial years) may help soften share price’s downside.

With additional reporting from Tay Peck Geck