Singapore Airlines (SIA) saw its stock price plummet by 3.01% in pre-market trading on Friday, following the release of its disappointing first-half financial results. The national carrier reported a sharp decline in profits, largely attributed to losses from its Indian associate, Air India.
SIA's net profit for the first half of the fiscal year fell to S$239 million, a significant drop from S$742 million in the previous year. This figure fell short of analysts' expectations, with the consensus estimate from Visible Alpha projecting S$341.9 million. The second quarter was particularly challenging, with profit plunging to just S$52 million from S$186 million in the first quarter.
The primary factor behind this profit slump was SIA's 25.1% stake in Air India, which it acquired through the integration of its joint venture Vistara into Air India in December 2024. The share of results from associated companies plummeted by S$417 million, largely due to Air India's losses. Despite strong passenger demand and lower fuel costs, intensifying competition in key markets has squeezed yields, further impacting SIA's performance.
In an effort to maintain investor confidence, SIA announced a three-year special dividend plan totaling about S$900 million, promising to pay 10 Singapore cents per share annually. Additionally, the airline declared an interim dividend of 5 Singapore cents per share. However, these measures appear insufficient to offset investor concerns about the company's financial health and future prospects.