Singapore Airlines hurt by loss of Air India; the investment can pay off

Singapore Airlines has seen Air India draw on its cash flow for nearly five quarters, but analysts and the airline say the investment will pay off in the long run.

SIA reported on Thursday a record revenue of S$20.5 billion ($16.06 billion) for its financial year ended March 31, as operating profit rose 39% to SG$2.38 billion on strong demand, higher yields and lower total fuel prices for the full year, SIA said.

However, net profit fell 57.4% year-on-year to SG$1.18 billion—mainly due to Air India’s losses and accounting gains in the previous year.

Air India has suffered many setbacks: Pakistan’s airport was closed in April 2025, then Flight 171 crashed in June, killing more than 250 people.

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

“These changes are aimed at improving network stability and reducing last-minute disruptions for passengers,” Air India said.

SIA’s entry into India’s fast-growing airline market is strategic, “and strategy often means not being profitable,” says independent aviation analyst Brendan Sobie. “But obviously the last year has been worse than anyone thought.”

Chief executive Goh Choon Phong said at an earnings conference on Friday that SIA would continue to support Air India, which he said had made “significant progress” in its turnaround plan, in areas such as staff training and reducing customer complaints.

“It will be a long game. There are no shortcuts,” he said.

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

Vistara merged with Air India in December 2024, giving SIA a 25.1% stake in the Indian flag carrier. As part of the deal, SIA invested S$360 million in Air India and committed to contribute up to S$880 million in additional capital in the future.

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

When asked if SIA will inject more money into Air India, Goh declined to comment, saying this “will be a discussion we will have to have with other shareholders.”

However, it can be difficult to avoid.

“Given the size of the losses and the continued operating pressure, the capital required for this round is likely to be much higher than initially expected,” DBS Group Research analyst Jason Sum said before the results were released.

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.”

The larger-than-expected cash injection will start to pressure dividend volume as SIA faces increasing pressure on earnings, Sum said.

SIA will be cashing in on Air India for many years, so there is a chance it could 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 improved airports and other infrastructure, so “it’s a good bet to be in that market,” Agarwal said. “The need is there.”

In the long run, “I think this will pay off for Singapore Airlines,” he added.