Air India's Financial Troubles Hit Singapore Airlines Hard
Singapore Airlines, the flagship carrier of Singapore, has reported a dramatic 67.8% year-on-year decline in net profit for the six months ending September, primarily due to substantial losses from its investment in Air India. The airline's net profit dropped to S$239 million during the April-September period compared to the same timeframe last year.
Accounting Impact and Quarterly Performance
According to the company's official statement, the profit decline was largely attributed to accounting losses from its 25.1% stake in Air India. The group's share of results from associated companies was S$417 million lower year-on-year, significantly reflecting Air India's losses that weren't included in the previous year's net profit.
The second-quarter performance was even more stark, with Singapore Airlines' net profit falling 82.1% year-on-year to S$52 million. This sharp decline was driven by two main factors: a S$295 million hit from the share of results of associated companies and lower interest income of S$42 million due to reduced cash balances and interest rate cuts.
Strategic Partnership and Long-term Vision
Despite the significant financial impact, Singapore Airlines has reaffirmed its commitment to the Air India investment as part of a long-term strategic move. The partnership with Tata Sons represents a key element of Singapore Airlines' multi-hub strategy, designed to establish a strong presence in one of the world's largest and fastest-growing aviation markets.
The airline stated: "The SIA Group remains committed to working with Tata Sons to support Air India's comprehensive multi-year transformation programme." Singapore Airlines holds one board seat at Air India, currently occupied by its CEO Goh Choon Phong, and has invested over ₹6,300 crore in the merged carrier's recapitalisation plan.
Air India's Current Challenges and Transformation
Air India Group, now the country's second-largest airline with a 27% market share, reported concerning financial results for the fiscal year ended March 31, 2025. While revenue increased by 15% to ₹78,636 crore, the net loss widened significantly to ₹10,859 crore. This consolidated entity includes Air India, Vistara, Air India Express, and AIX Connect, marking the first time financials were reported as a single merged group.
CEO Campbell Wilson is overseeing a five-year turnaround plan amid what he described as "unprecedented shocks" this year. These challenges included the tragic June 12 crash that claimed 241 lives and the closure of Pakistani and Middle Eastern airspace, which Wilson estimated could cost around ₹4,000 crore if continued for the full year.
Analyst Gagan Dixit from Elara Capital noted that the accounting impact from Air India's losses was expected. "Air India continues to wait for more fuel and cost-efficient Boeing aircraft, which is one of key reasons why their fleet renewals have slowed down. This has impacted the bottom line," Dixit explained, adding that a tough September quarter and unprecedented shocks like airspace closure compounded the challenges.
The merger between Vistara and Air India, completed in November 2024, resulted in Singapore Airlines holding a 25.1% equity stake in the combined entity, with Tata Sons Pvt Ltd controlling the remaining 74.9%.
