Singapore Air Profit Tumbles As Air India Loss Hits Earnings

Singapore Airlines Ltd. said it’s upbeat about travel demand over the peak summer travel period, even as the carrier weathers a slump in profit due to losses at Air India.

The airline’s net income dropped 59% to S$186 million ($145 million) in the three months ended June 30, the carrier said in a statement Monday. That was largely due to the results from Air India, in which it holds a 25.1% stake. Its performance wasn’t part of Singapore Air’s results last year.

The investigation into the fatal crash of Air India flight 171 in June is ongoing and the fallout is likely to continue to weigh on Singapore Air’s results. The Indian carrier cut capacity in the short-term to deal with operational challenges in the aftermath of the disaster.

Singapore Air remained positive about the months ahead, with robust demand across most regions it operates, even as it voiced caution over geopolitical and macroeconomic volatility.

The carrier offers the first glimpse as to how the headwinds are playing out in Asia, with major Western airlines painting a mixed picture. Earlier this month, American Airlines Group Inc. scaled back its earnings outlook after deep fare discounts to entice reluctant travelers, while Delta Air Lines Inc. gave a more upbeat outlook about demand and United Airlines Holdings Inc. said customers have resumed booking flights.

Singapore Air reported a 1.5% gain in revenue to S$4.79 billion, bolstered by record travel volumes and strong cargo demand. The airline group carried a record 10.3 million passengers in the quarter, up about 7%. The increase was largely driven by its low-cost Scoot unit, as the main brand saw softer demand on long-haul flights.

The airline saw a 8.5% jump in non-fuel expenses with overall growth in costs outstripping revenue growth. Jet fuel costs fell, helped by lower fuel prices.

Yields, a proxy for airfares, declined 2.9% to 10 Singaporean cents per kilometer from 10.3 cents a year earlier, slowing from prior quarters. Still, heightened competition is weighing on operations as rivals continue to add capacity.

The carrier’s group capacity still remains 6.7% lower than a pre-Covid peak. In the months ahead, it will tighten its grip in its home market as rival Jetstar Asia prepares to operate its last flight on Thursday. Singapore Air has pledged to take over much of the capacity left by Jetstar Asia’s exit.

Shares in the airline closed 0.4% higher Monday, taking gains this year to 18%