Singapore Airlines Group’s profit nearly halves as fuel costs bite

Singapore Airlines Group's first-half profit nearly halved as soaring fuel costs took a heavy toll on the carrier's earnings. Despite a 16.8% rise in revenue to SGD11.3 billion, propelled by increased demand for both passenger travel and air cargo, the group faced significant headwinds. The company attributed the decline to an ongoing Middle East conflict that could have wider macroeconomic impacts, and the potential for further inflationary pressures to squeeze profit margins.

Morningstar's Lorraine Tan noted that higher jet fuel expenses, which cannot be fully passed onto customers, continue to weigh heavily on the company's earnings. Singapore Airlines and its low-cost subsidiary Scoot, while serving different customer bases, have a diversified network that helps mitigate demand fluctuations. The airline adjusted fares and cargo rates to address operational and supply chain challenges, but these measures only partly offset the impact of persistent high fuel prices.

Air India, a subsidiary with substantial losses, has shown some positive progress under a multi-year transformation plan, but the group remains cautious about the prolonged conflict's potential long-term effects on the broader airline industry.