Singapore Airlines Q2 2025: 82% Earnings Drop Driven by Air India Investment Losses

This analysis is based on the CNBC report [1] published on November 13, 2025, which reported Singapore Airlines’ significant earnings decline driven by Air India investment losses.

Singapore Airlines reported a dramatic 82% drop in second-quarter earnings for the three months ended September 2025, with net profit falling to S$52.4 million from S$290.3 million a year earlier [1][3]. This result significantly missed analyst consensus estimates of S$181.47 million, representing a 71.1% earnings miss [3]. The stark contrast between operating performance and net profit reveals the core issue: while operating profit actually increased 22.5% to S$398 million, driven by healthy passenger demand (+5.1% YoY) and lower fuel prices, the bottom line was severely impacted by non-operating factors [1].

The primary driver of the earnings decline stems from SIA’s 25.1% stake in Air India, which began equity accounting in December 2024 following the November 2024 merger with Vistara [2][3]. The Air India investment directly reduced SIA’s earnings by S$295 million in Q2 alone [3]. More concerning, Air India has reportedly sought at least 100 billion rupees ($1.1 billion) in financial aid from SIA and Tata Sons after a June crash that killed more than 240 passengers [3]. This potential additional capital requirement represents a significant risk to SIA’s balance sheet and future earnings trajectory.

The market has reacted negatively to these developments, with Singapore Airlines shares significantly underperforming the broader market. The stock has risen only 3.3% year-to-date compared to the benchmark Straits Times Index’s 21% gain [1]. This performance gap reflects investor concerns about the Air India investment’s drag on earnings and uncertainty surrounding the Indian carrier’s path to profitability [1]. SIAL.SI currently trades around S$6.58-6.62, well below its 52-week high of S$7.63 [0].

Despite the earnings challenges, SIA continues pursuing strategic expansion through its multi-hub strategy, with the Air India investment representing a calculated entry into the fast-growing Indian aviation market [1]. The airline has also been expanding codeshare arrangements with partners including Vietnam Airlines and Lufthansa Group to strengthen network coverage [3]. However, the company faces broader industry challenges including geopolitical tensions, macroeconomic headwinds, inflationary cost pressures, and supply chain constraints [1][3].

The most critical insight is the significant deterioration in earnings quality. While operating metrics remain strong (operating profit +22.5%, passenger traffic +5.1%), the net profit conversion has been severely compromised by the Air India investment [1]. This suggests that SIA’s core airline operations remain healthy, but strategic investments are creating substantial earnings volatility.

The potential $1.1 billion additional funding requirement for Air India represents a material capital allocation risk that could impact SIA’s financial flexibility and shareholder returns [3]. Despite announcing interim dividend of S$0.05 per share and special dividend of S$0.03 per share, the company may need to reconsider capital allocation priorities if Air India requires substantial additional funding [4].

DBS Group Research analyst Jason Sum noted that “SIA’s valuations have slightly outpaced its fundamentals at this juncture, given the downward earnings trajectory and uncertainty surrounding Air India” [1]. This suggests the current stock price may not fully reflect the earnings uncertainty and potential dilution from additional capital requirements.

1. Air India Profitability Timeline
   : The Indian carrier’s uncertain path to profitability creates ongoing earnings uncertainty and could require multiple quarters of additional support [1][3].

2. Capital Requirements
   : The potential $1.1 billion lifeline being discussed could strain SIA’s balance sheet and impact financial flexibility [3].

3. Interest Income Pressure
   : Interest income fell by S$103 million due to smaller cash balances and rate cuts, and further rate cuts could continue to pressure this income stream [4].

4. Competitive Pressure
   : Heightened competition is affecting yields despite strong passenger demand, potentially margin pressure [1].

5. Geopolitical Risk
   : Regional tensions could impact both passenger and cargo demand, adding another layer of uncertainty [1].

1. Core Operating Strength
   : The 22.5% increase in operating profit demonstrates the underlying strength of SIA’s core business [1].

2. Network Expansion
   : Continued codeshare partnerships could enhance network coverage and revenue opportunities [3].

3. Fuel Cost Advantage
   : Recent fuel price declines have supported operating profitability, though this advantage may be temporary [1].

4. Market Position
   : SIA maintains strong brand positioning and service quality, providing competitive advantages in premium segments [1].

Singapore Airlines’ Q2 2025 results reveal a complex situation where strong operating performance (operating profit +22.5% to S$398 million) was overshadowed by significant investment-related losses from Air India [1][3]. The company missed net profit forecasts by 71.1%, reporting S$52.4 million versus expectations of S$181.47 million [3]. The Air India stake, which began equity accounting in December 2024, created a S$295 million earnings drag in Q2 alone and may require up to $1.1 billion in additional funding [3]. Market sentiment has been dampened, with the stock underperforming significantly (+3.3% YTD vs STI +21%) [1]. While the core airline business remains healthy with growing passenger demand, the uncertainty surrounding Air India’s transformation and potential capital requirements creates substantial earnings volatility [1][3]. The company announced dividends despite challenges, but may face difficult capital allocation decisions if Air India requires substantial additional support [4].