Singapore Airlines turns to net loss as fuel costs soar

Singapore Airlines Group reported a net loss of S$76 million for its first fiscal quarter, as a massive 78.5% surge in net fuel costs triggered by Middle East conflict wiped out gains from record passenger and cargo revenues. The carrier, widely considered a global bellwether for international aviation, delivered a top-line revenue performance of S$5,714 million for the three months ended June 30, 2026, an increase of S$19.34,790 million in the same period a year earlier. Strong seasonal travel demand, higher passenger yields, and robust cargo rates lifted sales across both its mainline airline and low-cost carrier subsidiary, Scoot. However, total group expenditure swelled by 27.9% to S$5,609 million, driven almost entirely by an unforgiving S$991 million spike in net fuel costs. Operating profit plummeted 73.8% to S$106 million, compared to S$405 million in the prior-year period. The swing into the red underscores the extreme vulnerability of long-haul international airlines to geopolitical disruptions in global energy markets, even during periods when underlying consumer travel appetite and commercial air freight remain exceptionally buoyant. The primary catalyst for the quarter’s bottom-line reversal was the escalation of geopolitical conflict in the Middle East, which broke out on Feb. 28, 2026. The outbreak sent jet fuel benchmark prices soaring globally, impacting airline balance sheets with a delayed effect due to standard lagged supply contracts. Before hedging adjustments, SIA’s gross fuel cost more than doubled, surging 118.7% to S$2,629 million from S$1,202 million a year earlier. This S$1,427 million gross increase was driven by a S$1,459 million cost hit from elevated global jet fuel prices and a S$42 million increase attributable to higher operational fuel burn as capacity expanded. A favourable turn in financial derivatives helped soften the blow. SIA recorded a net fuel hedging gain of S$376 million for the quarter, successfully executing a turnaround from a S$60 million hedging loss incurred in the first quarter of FY2025/26. Nevertheless, even after applying S$376 million in derivative gains, net fuel expenditure settled at S$2,253 million—an absolute increase of S$991 million over the previous year. “Geopolitical developments, including the Middle East conflict, continue to add uncertainty to the airline industry’s operating environment,” Singapore Airlines said in its official earnings release. “The most immediate impact is on jet fuel prices, the Group’s single-largest expenditure item. Sustained elevated prices relative to pre-conflict levels have added significant cost pressure.” Management cautioned that while Singapore Airlines and Scoot have adjusted passenger fares and implemented cargo fuel surcharges to mitigate rising expenses, these pricing actions “do not fully offset the impact of significantly higher fuel prices.” Non-fuel operating costs also rose 7.4% to S$3,356 million, driven by fleet expansion, increased flight hours, and general inflationary pressure across international airport ground handling and navigation services. Despite heavy fuel headwinds, SIA Group’s commercial engine operated near peak capacity, carrying a combined 10.9 million passengers across Singapore Airlines and Scoot during the three-month period—a 6.3% increase from 10.3 million passengers in the corresponding quarter last year. Group passenger revenue expanded 18.6% to S$4,582 million. Commercial performance was significantly boosted by a 12.0% jump in group passenger yields, which reached 11.2 Singapore cents per revenue passenger-kilometre (pkm). Overall passenger capacity, measured in available seat-kilometres (ASK), expanded 5.9% year-on-year to 46,824.2 million. Group passenger traffic, measured in revenue passenger-kilometres, grew 5.3% to 40,806.6 million. Because overall capacity expansion slightly outpaced traffic growth, the group’s average passenger load factor (PLF) softened by 0.5 percentage points to 87.1%, compared to 87.6% a year ago. Mainline carrier Singapore Airlines carried 7.1 million passengers, up 4.1% year-on-year. Mainline passenger yields surged 12.7% to 12.4 cents per pkm, driving revenue per available seat-kilometre (RASK) up 11.5% to 10.7 cents. However, fuel-driven expense growth outstripped revenue gains: mainline unit cost including fuel escalated 22.5% to 10.9 cents per ASK. Consequently, the mainline breakeven load factor climbed 7.0 percentage points to 87.9%—exceeding its actual achieved load factor of 86.2% and triggering operational losses on standard flight operations. Excluding fuel, mainline unit costs declined 1.7% to 5.9 cents per ASK, reflecting disciplined cost management in non-energy operations. Low-cost arm Scoot posted strong passenger volume, handling 3.8 million travellers—a 10.8% increase year-on-year. Scoot’s passenger yield surged 19.7% to 7.3 cents per pkm, while its load factor remained high at 90.6% (down 0.9 percentage points from 91.5%). However, Scoot’s overall unit cost surged 21.7% to 7.3 cents per ASK, pushing its operational breakeven load factor to a theoretical 100.0%. The group’s cargo division served as a vital revenue buffer, capitalising on global supply chain recalibrations and high-tech manufacturing shipments across Asia-Pacific routes. Cargo revenue jumped 33.5% to S$708 million, up S$178 million from S$530 million in the prior-year quarter. Cargo yield leaped 28.1% to 44.2 cents per load tonne-kilometre (ltk), while total cargo load increased 4.0% to 1,600.7 million tonne-kilometres. Total cargo and mail carried reached 308,400 tonnes, up 6.6% year-on-year. With gross cargo capacity expanding by a modest 0.5% to 2,720.2 million tonne-kilometres, the group’s cargo load factor (CLF) improved by 1.9 percentage points to 58.8%. Air freight demand was particularly resilient in specialised sectors, including semiconductor manufacturing hardware, microchip components, and data centre equipment. A central factor was a S$42 million increase in the group’s share of losses from Air India. SIA holds a 25.1% stake in the Air India Group following the merger of Vistara into the Indian carrier. Air India is currently undertaking a multi-year, capital-intensive restructuring program involving fleet modernizations and cabin retrofits. Ongoing instability in the Middle East has forced structural operational shifts across SIA’s route network. Scoot resumed passenger flights to Jeddah, Saudi Arabia, on June 22, 2026, but suspended service again on July 14 due to escalating regional tension. Mainline SIA flights to Dubai remain suspended, while the planned launch of nonstop flights to Riyadh has been postponed to December 2026. United Kingdom & Europe: SIA will step up London Gatwick services to twice-daily between July 2 and Aug. 29, 2026, returning to twice-daily permanently on Oct. 25. This will give SIA six daily flights into London (including four daily flights to Heathrow). Manchester flights increased to daily on July 13, while Amsterdam frequencies rise to 10 weekly from Aug. 1 to Oct. 22. Winter schedule additions include extra flights to Milan and Munich, plus a new five-times weekly service to Madrid via Barcelona launching Oct. 26. Australia & New Zealand: SIA will add flights to Adelaide from Oct. 25, 2026, and launch daily service to the new Western Sydney International Airport (WSI) in November 2026, bringing total Sydney service to five daily flights. Alliance partner Air New Zealand will add seats to Auckland and introduce new nonstop Christchurch flights. Asia-Pacific: SIA launched daily service to Hangzhou in June 2026, while Scoot introduced new direct Singapore links to Belitung (May 2026) and Pontianak (June 2026) in Indonesia. As of June 30, 2026, the group’s global passenger network reached 137 destinations in 36 countries and territories (SIA serving 78 destinations, Scoot serving 85, with 59 served exclusively by Scoot). The cargo network spanned 139 destinations. During the quarter, SIA Group took delivery of four new aircraft—one Airbus A320neo and three Boeing 737-8s. The operating fleet reached 220 passenger and freighter aircraft with an average age of seven years and 11 months. The group holds firm orders for 62 additional aircraft, including 31 Boeing 777-9s and seven Airbus A350F freighters. On the ground, SIA opened a new First Class SilverKris Lounge at Singapore Changi Airport Terminal 2 and finished refurbishing lounges in Brisbane, Bangkok, and Hong Kong. Upgrades to Singapore Business Class lounges and a new facility in Melbourne are scheduled for completion later in FY2026/27. SIA plans to reveal a complete overhaul of its long-haul cabin interiors later in 2026, including new seats, an updated KrisWorld entertainment system, and revised dining programs. Beginning in 2027, the airline will begin rolling out high-speed Starlink satellite Wi-Fi across its international fleet. Looking ahead, industry analysts note that while SIA’s liquidity reserve of S$10.48 billion insulates the company from operational disruption, sustained high jet fuel prices could continue to pressure earnings into subsequent quarters unless jet fuel prices soften or passenger yields expand further. For Editorial Inquiries Contact: Editor Matt Driskill at [email protected] For Advertising Inquiries Contact: Head of Sales Sally Passey at [email protected]