There are few companies Singaporeans watch as closely as Singapore Airlines (SIA).
Its aircraft carry the Singapore flag around the world, its cabin crew have become national icons, and its service standards are often treated as a reflection of Singapore itself. That makes SIA more than just another listed company. When it succeeds, Singaporeans take pride in it. When something goes wrong, everyone pays attention.
And by most operating measures, SIA had an exceptional year. It carried more passengers, generated more revenue and earned a higher operating profit than ever before. Yet the mood at this year’s AGM was not entirely celebratory. Again and again, shareholder questions returned to one subject: Air India.
Here’s what I took away from the 2026 Singapore Airlines annual general meeting.
1. Net profit fell sharply, but SIA’s underlying business had a record year
At first glance, SIA’s results looked disappointing. Net profit fell 57%, from S$2.78 billion to S$1.18 billion. A drop of that size might suggest that the airline’s business had weakened badly. But that is not what happened.
During the AGM, a shareholder asked why net profit had fallen so sharply even though operating profit had increased. Management explained that the previous year’s result included a one-off, non-cash gain from the merger between Vistara and Air India. That gain did not repeat this year. SIA also had to recognise a full year of losses from Air India, compared with only four months in the previous financial year.
According to SIA’s published financial results, operating profit rose 39% to a record S$2.37 billion, supported by record revenue of S$20.52 billion and a record 42.4 million passengers carried. In other words, SIA’s core airline business did not deteriorate. It delivered its strongest operating performance ever. The sharp fall in net profit was mainly caused by the absence of last year’s one-off gain and a much larger contribution of losses from Air India.
2. Air India remains SIA’s biggest source of uncertainty
Management explained that Singapore is a small market with limited room for SIA to continue growing at the rates it achieved in the past. India, with its expanding middle class, growing economy and rapidly developing airport infrastructure, is therefore being positioned as a potential new engine of growth for the group.
But the near-term financial impact has been painful.
According to SIA’s financial statements, the group recognised S$945.2 million as its share of Air India’s losses for the year. Air India itself reportedly suffered losses of around ₹22,000 crore to ₹26,800 crore, equivalent to approximately US$2.4 billion to US$2.8 billion.
At the AGM, management highlighted several factors that affected Air India’s performance:
- The closure of Pakistan’s airspace forced Indian airlines to take longer routes when flying to Europe and the U.S. Management said the additional flying had previously been estimated to cost Air India around US$600 million.
- The weaker Indian rupee also increased pressure because much of Air India’s revenue is earned in rupees, while major expenses such as fuel and aircraft payments are denominated in U.S. dollars.
- Management also said the June 2025 crash of Flight AI-171 led Air India to take a safety pause and cancel flights for an extended period, affecting its financial performance.
Together, these challenges make an already difficult turnaround even more complicated.
For now, SIA has not written down the value of its Air India investment. According to the financial statements, the estimated recoverable value of the investment remained above the amount recorded on SIA’s balance sheet. This means no impairment loss was required.
However, if Air India’s performance continues to fall short of expectations, SIA may eventually have to reduce the recorded value of the investment and recognise a loss.
3. Despite the losses, SIA remains committed to Air India
Management made it clear that SIA views Air India as a long-term investment rather than a short-term turnaround.
The group first entered India through Vistara, its joint venture with the Tata Group. Following the merger of Vistara with Air India, SIA became a 25.1% shareholder in the enlarged airline. Management argued that this gives SIA a rare opportunity to participate directly in the growth of one of the world’s largest aviation markets. It also noted that many foreign airlines have tried, unsuccessfully, to secure a strategic position in a major Indian carrier.
SIA is not simply holding the investment and waiting for the losses to improve. In January 2026, SIA and Air India signed an agreement to explore deeper commercial cooperation, including expanded codesharing, better schedule coordination and possible revenue-sharing arrangements. This suggests that SIA intends to integrate the two networks more closely over time.
When shareholders asked how long the turnaround would take and how much more SIA might invest, management acknowledged that no one could predict the timeline. It said any future investment would require a robust business case, remain within SIA’s financial means and receive full board scrutiny.
The chairman added that the Air India investment is discussed at every board meeting. And while that answer was honest, it’s definitely not a comforting one.
The long-term opportunity in India may be real, but shareholders still do not know how much more capital will be required or how long it will take before the investment begins earning an acceptable return.
4. SIA is taking advantage of weaker competition
Geopolitical tensions in the Middle East have created serious challenges for the airline industry.
At the AGM, management said some airlines had reduced flights or even collapsed as a result of the disruption. SIA first responded by adjusting its operations to protect passengers, employees and aircraft. That said, management also saw an opportunity in the uncertainty. As some passenger traffic shifted away from the Middle East, SIA moved to capture part of that demand.
Management also said cuts by competing airlines had freed up valuable airport slots in Europe. Amsterdam was highlighted as one market where SIA had wanted to add flights for years but had previously been unable to secure additional slots.
Separately, SIA has continued expanding its network with new services and additional capacity in selected markets. From April to June 2026, corporate flown revenue rose 25% from the previous year, while flown cargo revenue increased 34%.
The takeaway is that SIA is not merely defending itself against geopolitical disruption. Its strong balance sheet, aircraft fleet and global network allow it to expand when weaker competitors are forced to retreat.
5. KrisFlyer is becoming a valuable business of its own
Together, SIA and Scoot serve 137 destinations, while partnerships with more than 120 airlines give customers access to over 900 additional destinations worldwide. This gives the group one of the broadest networks operating through Changi Airport.
The group’s KrisFlyer programme makes that network even more valuable. The loyalty programme now has 11.8 million members worldwide, up 15% from the previous year. It also generated S$1.6 billion in revenue across businesses such as Scoot, Kris+, KrisShop and Pelago.
This means KrisFlyer is no longer simply a programme for collecting and redeeming miles. It has become a wider ecosystem that encourages customers to continue spending within the SIA Group, even when they are not buying an SIA flight.
6. Fuel hedging gives SIA greater protection against price spikes
Fuel is one of SIA’s largest expenses, so a sudden rise in oil prices can have a significant impact on profits. To reduce this risk, SIA locks in the price of part of the fuel it expects to use in the future. This is known as fuel hedging.
At the AGM, management said approximately 45% of the group’s expected fuel requirements for FY2026/27 had already been hedged.
SIA follows what management described as a declining hedging approach. This means it locks in a larger portion of its fuel requirements for the coming months, but progressively less for periods further into the future. Its regular hedging programme extends up to 24 months, although it may occasionally lock in prices as far as five years ahead when market conditions are attractive.
Importantly, SIA does not hedge only the price of crude oil. That’s because the price of jet fuel doesn’t move in lockstep with crude (The cost of refining crude into aviation fuel can rise or fall on its own, so hedging crude alone wouldn’t fully protect against a jet fuel price spike.)
The final price paid for jet fuel is influenced by both crude oil prices and the cost of refining crude into aviation fuel. Management said around two-thirds of its hedges were linked directly to jet fuel prices, with the remaining one-third linked to Brent crude. This gives SIA some protection when jet fuel prices rise faster than crude oil prices, which had recently been happening.
The fifth perspective
Sitting through the Q&A, one thing became very clear.
Shareholders were not particularly worried about SIA’s core airline business. The numbers were strong, passenger demand remained healthy, and management spoke confidently about the network, KrisFlyer and future growth.
The real concern was Air India.
And to be fair, SIA can afford the losses for now. Its core business is generating record operating profit, the balance sheet remains strong, and the group continues to produce substantial cash. But that is only half the question.
Being able to absorb an investment’s losses does not automatically make it a good investment. The more important question is whether Air India can eventually earn an acceptable return on all the capital, time and management attention SIA is committing to it. That remains very uncertain.
For long-term investors, it may therefore be useful to think of SIA as two very different businesses inside the same stock.
The first is the SIA we already know: a premium airline with a world-class brand, strong pricing power, an extensive network and an increasingly valuable KrisFlyer ecosystem.
The second is its 25.1% stake in Air India: a bold long-term bet on one of the world’s fastest-growing aviation markets, but also one of the most difficult airline turnarounds imaginable.
The potential reward is significant. If Air India succeeds, SIA gains meaningful exposure to a huge domestic market that it could never build in Singapore. But the risks are equally real. Air India may require more capital, more time and far more patience before it produces sustainable profits. Right now, SIA’s core business is strong enough to carry that burden.
The question investors need to keep asking is not whether SIA can continue funding Air India. It is whether Air India will eventually justify the cost.
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