Singapore Airlines Shares Dip as Profits Plummet Amid Rising Competition
Shares of Singapore Airlines (SIA) fell sharply after the airline announced a nearly 50% drop in net profits for the April-September period, attributing the decline to intense competition and lower yield. The company’s shares plunged by as much as 6.2% when markets opened on Monday, recovering slightly to end 3.57% lower.
For the first half of the fiscal year, SIA reported a net profit of SG$742 million (US$559.12 million), nearly halving from SG$1.44 billion during the same period last year. Operating profits also dropped by 48.8% to SG$796 million from SG$1.55 billion, despite a 3.7% increase in revenue to SG$9.5 billion. Despite the steep decline, the airline declared an interim dividend of 10 Singapore cents per share.
The airline attributed the fall in operating profits to growing competition and increased capacity across key markets, which put downward pressure on ticket prices and yields. During an earnings briefing, Chief Commercial Officer Lee Lik Hsin noted that SIA is facing tougher competition as other airlines restore pre-pandemic capacity levels. SIA CEO Goh Choon Phong added that the return to higher capacity levels has created additional pressure on yields compared to last year.
While passenger traffic grew by 7.9% year-on-year, this was outpaced by a capacity expansion of 11%, leading to a slight drop in the passenger load factor—a metric reflecting seat occupancy—by 2.4 percentage points, settling at 86.4%. Lee emphasized that SIA will continue to expand its capacity, despite the competitive environment.
Looking ahead, Singapore Airlines expressed optimism about sustained demand for air travel in the latter half of the financial year but acknowledged that competition will remain intense. The airline recently announced a SG$1.1 billion cabin retrofit program for its fleet of Airbus A350 long-range and ultra-long-range jets, with plans for the first retrofitted aircraft to be operational by 2026 and full completion by 2030.
