SIA backs Air India turnaround despite losses as annual profit falls 57.4% amid industry pressures

Singapore Airlines (SIA) has reaffirmed its commitment to Air India’s transformation despite mounting financial losses and operational disruptions, with CEO Goh Choon Phong describing the carrier’s recovery as a long-term effort with “no shortcut”.

Speaking during SIA’s FY2025/2026 results briefing on 15 May 2026, Goh said the group had always recognised the challenges involved in rebuilding Air India.

“We have never had any illusion that it is an easy path,” Goh said.

“Way back when we started the joint venture with our partner Tata Sons to set up Vistara, we knew at that point in time that it is a long game.”

SIA owns a 25.1 per cent stake in Air India, which reported a record US$2 billion loss for the last financial year.

The Indian carrier has also faced heightened scrutiny following the crash of flight AI171 in 2025 that killed 260 people.

Executives spent a significant portion of the briefing defending the long-term rationale behind the investment as analysts questioned whether SIA would continue backing the airline financially.

Long-term India strategy

Goh linked SIA’s Air India investment to the group’s broader “multi-hub strategy”, which he described as essential given Singapore’s limited domestic market and airport capacity constraints.

“Even with Terminal 5, at some point in time, we know that that capacity will be used up,” Goh said.

“Fundamentally, we are in a small market with no domestic operations.”

He said the vulnerability of SIA’s business model became especially visible during the COVID-19 pandemic, when border closures left the airline heavily dependent on cargo operations while carriers with domestic networks continued flying local routes.

According to Goh, those limitations pushed SIA to seek additional long-term growth engines outside Singapore.

India remains central to that strategy because of its rapidly expanding aviation market.

India is currently the world’s third-largest air transport market, although it still operates significantly fewer aircraft than the United States and China.

Its middle class is projected to double to 864 million people by 2047, alongside rising disposable incomes, airport expansion plans and commercial fleet growth.

“If you look at India today, I don’t think there’s any question about its growth potential,” Goh said.

Vistara merger and Air India challenges

SIA’s relationship with Air India deepened following the merger of Vistara Airlines into Air India in 2024.

Vistara, a joint venture between SIA and Tata Sons, began operations in 2015.

As part of the merger transaction, SIA invested S$360 million (US$281.5 million) into Air India.

Goh said Air India is currently facing both industry-wide and company-specific challenges.

The broader aviation sector continues to grapple with supply chain disruptions that have delayed aircraft deliveries, fleet renewal programmes and cabin retrofitting schedules.

The airline has also been affected by the ongoing Middle East crisis.

In addition, Air India faces several pressures unique to the carrier.

These include Pakistan’s closure of its airspace to Indian airlines, the operational fallout from the AI171 crash and the depreciation of the Indian rupee against the US dollar.

The AI171 crash prompted a voluntary safety pause that reduced flight frequencies across parts of the network.

“These are certainly headwinds, but these are all external factors,” Goh said.

Despite the difficulties, he pointed to improvements in customer loyalty and passenger satisfaction metrics.

“We are committed to support Air India in its transformation efforts, but we're not alone,” Goh said.

He added that controlling shareholder Tata Sons remained equally committed to the airline’s recovery.

“We want to make Air India … a world-class carrier, a world-class airline in the Indian hub.”

Capital support questions

During the question-and-answer session, SIA executives declined to specify how much additional capital the airline group might be prepared to inject into Air India in future.

Executives said such discussions would need to involve shareholders.

Goh also avoided offering a timeline for Air India’s turnaround.

Instead, he said investors should focus on whether the airline is making structural improvements and whether current setbacks are caused by internal weaknesses or external conditions.

SIA executives disclosed that two employees have already been seconded to Air India in senior operational roles.

One serves as chief operations officer while another holds the position of chief of engineering.

SIA reported 57.4% decline in annual profit for FY2025/2026

Executives were also questioned about whether airfares could rise further as fuel costs increase amid instability in the Middle East.

Chief commercial officer Lee Lik Hsin said pricing decisions would continue to depend heavily on market demand.

“Airfares are a function of supply and demand,” Lee said.

“We want to price at a point that customers are still willing to buy, so we will have to watch the market carefully.”

SIA previously said fare increases across both SIA and Scoot networks have not fully offset the increase in jet fuel costs, which remain the group’s largest operating expense.

The company said its FY2025/2026 results only captured one month of disruption from the latest Middle East conflict, which escalated on 28 February 2026.

Executives warned that the full financial impact would become more visible in FY2026/2027 results.

SIA reported a 57.4 per cent decline in annual profit to S$1.18 billion for FY2025/2026.

The fall was largely attributed to the absence of a S$1.1 billion one-off gain from the Vistara integration recorded in the previous financial year.

Losses linked to Air India also contributed to the weaker performance.

Operations and network strategy

Chief operations officer Tan Kai Ping said fuel supply conditions remain stable across SIA’s network for now, although longer-term visibility remains limited because of geopolitical volatility.

“The first thing that will happen when fuel supply runs short will be fuel rationing at airports,” Tan said.

He added that no such rationing measures are currently taking place.

Goh said SIA has adopted a different approach from several airlines that reduced capacity following the Middle East conflict.

While the group cut services to Dubai and postponed the launch of flights to Jeddah, it also expanded capacity on other international routes.

Executives highlighted Europe as a major growth market, with SIA’s European network now approximately 13 per cent larger compared with levels before the conflict involving Iran.

“We are in a position where we don’t need to cut capacity,” Lee said.

“Our financial position is strong, and therefore we are actually growing rather than cutting capacity.”