Singapore Airlines sticking with Air India for the "long game" despite losses

Singapore Airlines has seen Air India drag on its earnings for about five quarters, but analysts and the airline say the investment will pay off in the long term.

SIA reported on Thursday a record revenue of 20.5 billion Singapore dollars ($16.06 billion) for its financial year ended March 31, as operating profit surged 39% to SG$2.38 billion on higher demand, higher yields and lower full year net fuel cost, SIA said.

However, net profit plunged 57.4% year-on-year to SG$1.18 billion— mainly owing to Air India's losses and an accounting gain in the previous year.

Earnings per share: 38.4 Singapore cents vs. 35 Singapore cents expectedRevenue: SG$20.5 billion vs. SG$20.07 billion expected

Air India has been beset by numerous hindrances: Pakistan's airspace closed in April 2025, then Flight 171 crashed in June, killing more than 250 people.

Now, the Iran war and the carrier's connectivity exposure to the Middle East market are wreaking havoc, forcing the airline to cancel nearly a third of its flights during the peak June to August travel period.

"These changes are aimed at improving network stability and reducing last-minute inconvenience to passengers," Air India said.

SIA's venture into India's rapidly growing aviation market is strategic, "and strategic usually means unprofitable," said independent aviation analyst Brendan Sobie. "But obviously the last year has been worse than anyone would have imagined."

Air India recorded a loss of SG$3.56 billion, or $2.8 billion, far exceeding the $2.4 billion expected loss reported by Bloomberg in April. SIA's share of the loss amounted to SG$945.2 million.

Air India has weighed on the bottom line since SIA began accounting for the Indian carrier in late 2024.

CEO Goh Choon Phong said at earnings briefing Friday that SIA will still continue to support Air India, which he said had made "tangible progress" in its transformation program, in areas like staff training and reduced customer complaints.

"It is going to be a long game. There is no shortcut," he said.

SIA's India gambit

SIA entered the Indian aviation market when it launched Vistara with Tata Sons, the promoter of the Tata Group conglomerate, in 2015.

Vistara merged into Air India in December of 2024, giving SIA a 25.1% stake in India's flag carrier. As part of the deal, SIA injected S$360 million in cash into Air India and committed to contributing up to S$880 million in additional capital in the future.

Air India is seeking at least 100 billion rupees (S$1.47 billion) in financial support from SIA and Tata, according to a Bloomberg report in April.

When asked if SIA will inject any additional capital into Air India, Goh declined to comment, saying that this "will be a discussion that we will have to have with our fellow shareholders."

However, it may be hard to avoid.

"Given the magnitude of losses and continued operating pressure, the capital required in this round is likely to be meaningfully higher than initially expected," said DBS Group Research analyst Jason Sum before the results release.

Sobie, speaking to Squawk Box Asia Friday, said SIA will "definitely have to put in more money. There's no question about that. It's just a matter of how much and when."

A larger-than expected capital injection would start to constrain dividend capacity as SIA is facing rising earnings pressures, Sum said.

SIA will bleed cash for years as a result of Air India, so there's a chance it may sell its stake in Air India to Tata or another buyer, said Sumit Agarwal, a professor at the National University of Singapore.

However, India is pouring money into new and upgraded airports as well as other infrastructure, so "it's a good bet to be in that market," Agarwal said. "The demand is there."** **

In the long term, "I think this will pay off for Singapore Airlines," he added.