Singapore Airlines shares fall more than 8% after first-quarter profit plunges

Civil jet airplanes of Singapore Airlines and its subsidiaries — Tigerair, Silkair and Scoot — at Changi International Airport, Singapore

Universal Images Group | Getty Imagess of Singapore Airlines plunged after the carrier reported a 59% decline in earnings for the first quarter of its financial year (noteworthy indeed), in light of current trends

It's currently trading 7

Nevertheless, Net fit fell to 186 million Singapore dollars ($144 million) for the quarter June 30, according to the company's earnings report

Moreover, The drop was attributed to reduced interest income and losses from its associates

Stock Chart IconStock chart iconStocks of Singapore Airlines fall over 8% after first quarter fit plunges"In addition to the lower operating fit, the reduction in net fit was largely attributable to a lower interest income on the back of lower cash balances and interest rate cuts, and the Group recording a of losses of associated companies compared to a of fits for the same quarter last year," SIA said in its earnings statement

SIA began equity accounting for the airline from December 2024. "Air India losses were significantly deeper than expected and are unly to ease in the near term as the airline navigates a complex restructuring alongside reputational damage," Tabitha Foo, equity re analyst at DBS Bank, told CNBC, in light of current trends

In contrast, "ing the [Boeing] Dreamliner incident in June, Air India reportedly saw a 20% drop in bookings across domestic and international routes," she said, adding that average fares dropped 8% to 15% while cancellations rose, especially among corporate and premium leisure travelers (noteworthy indeed)

Furthermore, Yet, "Air India is still ly to remain a near-term drag on SIA's bottom line," she said

The negative pull by Air India's financials isn't surprising, said Brendan Sobie, an independent analyst at Sobie Aviation (an important development)

Additionally, 78 billion in the previous financial year, which in March. "In this quarter, you now have a net loss from Air India

It's just impacting the net figures," he said. "The operating figures

On the other hand, Vide a better indication of how SIA and the market here are doing. "Demand stays 'strong'Singapore Airlines' operating margins are normalizing from pandemic highs as competition rises, said Lorraine Tan, director of equity re at Morningstar (noteworthy indeed)

Furthermore, "Passenger capacity [is] ramping up as fleets grow," she said, in this volatile climate. "This remains the key challenge to the group's operating margins over the next few years (which is quite significant)

This leads to the conclusion that soft oil prices will help mitigate rises in other costs, in today's financial world. "SIA noted that demand for air travel and cargo "remained strong" despite geopolitical uncertainties

However, "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, amid market uncertainty

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

Trade war have led to unpredictable and uncertain demand for its cargo, its "diversified network and verticals reduce its exposure to specific regions or market segments, given current economic conditions. ""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 (this bears monitoring)

On the other hand, However, Maybank cited SIA's weaker cargo demand and higher operating costs as reasons for reducing its fit estimates for the carrier by 25–29% over the next three years, amid market uncertainty. "We think the 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