Why Singapore Airlines is making record revenue but less profit

On paper, Singapore Airlines (SIA) looks like it’s at the top of its game. Planes are full, revenue is at a record high, and the airline keeps sweeping global awards. Yet profits have dropped sharply, the dividend is slipping, and SIA just reported its first quarterly loss since the pandemic.

So what’s going on here? How can an airline be doing so well in the air, but see its bottom line go the other way? And what can we learn from this as individual investors and everyday money managers?

Let’s walk through the story, because buried inside SIA’s numbers are some surprisingly useful personal finance lessons about risk, diversification, and what happens when you stretch too far for growth.

The original problem: no home market

To understand today’s situation, we have to rewind to 1972, when Malaysia-Singapore Airlines split in two. Malaysia built its airline around domestic routes. Singapore took the jets, the international routes, and the global ambition.

That split created a structural difference that still shapes SIA’s finances today:

Malaysia got: domestic routes connecting cities within the country. These are not glamorous, but they’re dependable. People fly because they need to get from one part of their own country to another. That’s what the industry calls a home market.

Singapore got: long-haul jets, an international network, and the world. But it didn’t get a home market. Singapore is too small for domestic flights. Every single SIA route crosses a border, and every single seat has to be sold in competition with other airlines.

In simple money terms: Malaysia’s airline started each year with a base of relatively “captive” demand. SIA didn’t. If passengers in Sydney, Frankfurt, or Mumbai decide to fly with someone else, SIA has to win them back from scratch.

That’s why SIA leaned so hard into service, brand, and the whole “Singapore Girl” experience. It wasn’t just culture. It was survival. When you don’t have a home market, you have to compete on something else.

Record revenue, but profits under pressure

Fast forward to today. By most operating metrics, SIA is doing great:

• SIA and Scoot carried 42.4 million passengers last financial year – the most in their history.

• Revenue hit just over SGD 20 billion – another record.

• Load factor (how full the planes are) was high – about 87 out of every 100 seats had a paying passenger.

But when you look at profit, the story changes:

• Net profit fell 57.4% year-on-year.

• Net margin dropped from 14.2% to 5.8% – so for every SGD 100 of revenue, SIA kept under SGD 6, down from about SGD 14.

• The dividend has been cut three years in a row: from 48 cents to 40 cents to 37 cents per share.

• In the quarter to June, SIA posted its first quarterly loss since the pandemic, even though that same quarter saw record revenue and record passenger numbers.

So where is the money going?

Reason #1: higher fuel costs

The first and more straightforward reason is fuel.

In that loss-making quarter:

• Net fuel cost was SGD 2.25 billion – up 78.5% from a year earlier.

• Jet fuel prices (before hedging) jumped from about USD 89 a barrel to about USD 193.

• Fuel now makes up around 40% of everything the group spends.

That surge in fuel costs dragged operating profit down by about SGD 299 million. Even so, SIA still managed to make an operating profit of SGD 106 million for the quarter. In other words, the core flying business – carrying passengers from A to B – was still in the black.

The real damage came from somewhere else on the income statement.

Reason #2: the cost of buying a “home market”

Remember SIA’s original problem – no home market? For decades, the way SIA tried to solve that was by buying stakes in other airlines that did have domestic networks.

The idea was simple: if Singapore is too small to give you a base of passengers, go buy a piece of someone else’s base. Their domestic passengers can then feed into your international routes.

On paper, that sounds clever. In practice, it has been expensive.

SIA’s long history of costly airline bets

Over the years, SIA has tried this strategy at least six times:

1. Delta + Swissair (1989): A three-way global alliance where the airlines bought shares in one another. It lasted about eight years before they unwound it themselves, saying it “promised more than it delivered.”

2. Virgin Atlantic (1999): SIA paid USD 966 million for 49%. Thirteen years later, it sold that same 49% to Delta for USD 360 million. On paper, the sale showed a gain because SIA had already written down the investment over the years – but the economic damage was real, just spread out over time.

3. Air New Zealand (2000): SIA bought 25%. After a bailout by the New Zealand government in 2001, its stake was diluted to 4.5%. By 2004, SIA exited, and the deal was described as a costly, failed foray.

4. Virgin Australia: SIA increased its stake to 19.9%. In April 2020, Virgin Australia went into voluntary administration. SIA wrote off SGD 343.8 million. The stake went to zero.

5. NokScoot: A Thai joint venture between Scoot (49%) and Nok Air (51%). It was liquidated in June 2020, costing SIA SGD 127 million. Scoot even offered its 49% stake to Nok Air for 1 Thai baht – and Nok still said no.

6. Air India: The current and biggest bet. SIA owns 25.1%, carried on its books at about SGD 1.1 billion.

Which brings us to the line on SIA’s income statement that really matters: share of results of associated companies.

How Air India shows up in SIA’s numbers

When you own a big minority stake in a company (like 25%) but don’t control it, you don’t consolidate its revenue and expenses line-by-line. Instead, you take your share of its profit or loss and show it on a single line: the share of results of associated companies.

So Air India’s entire year – good or bad – basically lands there for SIA.

In the latest financial year:

• Air India and Air India Express together lost 22,238 crore rupees – more than double the 10,859 crore they lost the year before.

• Their revenue actually fell about 9%, to 71,870 crore rupees.

• SIA’s share of these losses turned its associates line from a positive SGD 17.1 million the previous year to a negative SGD 828.5 million.

That’s a swing of more than SGD 800 million – enough to explain a huge chunk of SIA’s profit drop, even though the flying business itself remained profitable.

Is Air India just a bottomless pit?

At this point, it’s natural to ask: is SIA just throwing good money after bad?

Right now:

• SIA’s 25.1% stake in Air India is valued at SGD 1.1 billion on its books.

• At the end of March, SIA tested that value and decided it didn’t need to write it down – meaning it still believes the stake is worth at least that much.

• Air India has gone back to its two shareholders – Tata and SIA – asking for another USD 1.5 billion. Tata has reportedly agreed to put in about USD 1.1 billion. SIA is still negotiating.

There’s also political pressure. Some have questioned why SIA should keep funding losses in a foreign airline. As one MP put it: “No one, least of all Singaporeans, owes Air India a living.”

The Government’s response is that taxpayers aren’t directly paying for this – SIA funds its investments from its own balance sheet. And SIA does have more than SGD 10 billion in cash and over SGD 3 billion of unused credit lines.

The bigger point, though, is strategic: if SIA wants to keep growing, it has to expand overseas because there’s a hard limit to how many people will ever fly to and from Singapore. Air India is one big way to tap into a massive home market that SIA itself will never have.

Is the Air India bet hopeless?

Not necessarily. There are signs of improvement:

• In June, Air India ranked 4th in the world for on-time arrivals – 86.85% across more than 15,000 flights.

• More than half of its widebody fleet is set to get updated interiors by the end of 2026.

• It has around 600 jets on order, with deliveries ramping up from 2027.

• The chairman has consistently said this is a five- to ten-year journey – not something that will turn around in a few quarters.

Leadership is also changing in a planned way. Former CEO Campbell Wilson signalled back in 2024 that he wanted to leave in 2026, and recently handed over to Tewolde Gebremariam, who previously ran Ethiopian Airlines.

Still, even if the long-term story is promising, the short-term reality is this: Air India is losing a lot of money right now, and SIA owns a quarter of that problem.

What this means for SIA shareholders

If you own SIA shares (or are thinking about it), the key tension is this:

• The core airline is strong – record revenue, high load factors, global awards.

• But profits and dividends are under pressure because of higher fuel costs and big losses from associated companies, especially Air India.

• DBS Group Research has already flagged that the money Air India needs is “likely to be meaningfully higher than initially expected,” and that funding it could limit how much SIA can pay out in dividends.

So if you’re holding SIA mainly for dividend income, your risk is no longer just about travel demand, fuel prices, and competition. It’s also about:

• How quickly Air India can narrow its losses.

• How much more capital SIA decides to commit.

• Whether SIA can negotiate better board influence and performance targets in exchange for putting in more money.

SIA’s board has said it will “carefully evaluate” any request for additional capital. Reports suggest SIA is pushing for more voting power and clearer targets for Air India’s financial performance before writing a bigger cheque.

The bigger money lesson: glamorous vs boring assets

There’s a deeper lesson here that applies to our own finances.

Back in 1972, Singapore took the glamorous half of the airline – the jets, the long-haul routes, the global brand. Malaysia took the boring half – domestic routes between its own cities.

For more than 50 years, it looked obvious who “won.” SIA became a world-class airline. Malaysia’s domestic routes never looked exciting from the outside.

But now we’re seeing the other side of the story:

• The glamorous side (global network, long-haul routes, premium cabins) is volatile and capital-intensive. It needs constant investment and is exposed to fuel prices, competition, and global shocks.

• The boring side (domestic routes, home markets) can be more stable and defensible. People still need to move around their own country, even when the world gets messy.

That’s not so different from personal finance. We’re often drawn to the exciting stuff – hot stocks, crypto, complex strategies – and we underestimate the value of boring, steady foundations like:

• A solid emergency fund.

• Broad, low-cost index investing.

• Reliable cash flow from a stable job or business.

If you’re interested in how this plays out in markets more broadly, I’ve written before about how macro shifts can hit stocks in ways that surprise people – for example in why rising bond yields could trip up stocks (and what that means for your money).

What individual investors can take away

You and I are not running national airlines, but there are a few practical lessons we can borrow from SIA’s situation.

1. Growth always comes with trade-offs

SIA’s push into other airlines was driven by a real constraint: Singapore is small. If it wanted to keep growing, it had to look overseas.

In our own finances, growth moves (like starting a business, investing more aggressively, or buying a rental property) also come with trade-offs. Higher potential returns usually mean higher volatility, more complexity, or more risk of loss.

There’s nothing wrong with chasing growth – but it should be deliberate and sized appropriately. You don’t want one big, risky bet to dominate your entire financial picture.

2. Diversification isn’t just about owning “more stuff”

SIA’s stakes in other airlines were meant to diversify its exposure. But if all your bets are in the same industry, with similar economic drivers, you’re not really diversifying; you’re concentrating risk.

For personal investing, owning multiple tech stocks is not the same as owning a diversified portfolio. Even owning different cryptocurrencies is still one narrow theme. True diversification cuts across sectors, geographies, and asset classes.

If you’re newer to investing and want a simple, diversified starting point, broad index funds and ETFs are usually a better foundation than scattered individual bets. I talk more about that mindset in pieces like why most people will miss bitcoin’s next big move.

3. Watch the cash flows, not just the story

Air India has a compelling turnaround story: new leadership, better on-time performance, upgraded cabins, hundreds of jets on order, and a huge home market. But until the losses narrow, that story is still costing real cash.

For us, it’s a reminder to look past the narrative and ask:

• Is this investment or decision generating cash, or consuming it?

• How long can I afford for it to be a drag?

• What does it do to my ability to meet other goals (like paying myself a “dividend” in the form of savings, or funding retirement)?

4. Don’t let one investment dictate your whole plan

For SIA, Air India is now big enough to move the needle on profits and dividends. That’s the risk of letting a single investment become too large or too central to your strategy.

At a personal level, the same thing can happen if:

• Most of your net worth is in one stock (often your employer’s).

• Your entire retirement plan depends on one property market doing well.

• Your income is tied to a single client or industry.

Healthy finances usually mean no single failure can break you. That’s the quiet power of diversification and boring, balanced planning.

So, is SIA losing its crown?

SIA isn’t struggling because it forgot how to run an airline. If anything, the core operation is stronger than ever: more passengers, more revenue, high load factors, and a long list of awards.

The problem is the same one it’s had since 1972: Singapore alone isn’t big enough to fill all those planes. To solve that, SIA has spent decades trying to buy itself a home market overseas. Some of those bets have already gone badly. The latest one – Air India – is still in progress, but right now it’s a major drag on profits and dividends.

Whether this sixth bet finally pays off will take years to know. In the meantime, it’s a live example of how even world-class businesses can be pulled down by capital-intensive growth strategies and big, concentrated bets.

For us as individual investors, the takeaway isn’t to avoid risk entirely. It’s to be very clear about what we’re betting on, how much of our financial life depends on it, and how long we can wait for the payoff.

Because in money – just like in aviation – the glamorous routes get all the attention. But it’s often the boring, dependable foundations that quietly keep everything in the air.