SINGAPORE — Singapore Airlines warned on Thursday that surging fuel costs due to the US-Iran conflict were still "filtering through" and would weigh more heavily in the year ahead, even as it reported a smaller-than-expected 57.4% drop in annual profit.
The fallout of higher jet fuel prices on costs was only partially reflected in March, Singapore's flag carrier said in its fiscal 2026 earnings report, which largely captured performance from a period before the conflict in the Middle East.
The group's fuel bills are typically priced on a lagged basis, and the full impact of the surge is expected to feed through in the following year, the airline added.
The closure of the key Strait of Hormuz after the outbreak of the US-Israeli war on Iran in late February has sent jet fuel prices surging far beyond the rise in crude prices, compounding cost pressures across the global aviation industry.
"While SIA and Scoot have raised air fares across their network, the adjustments do not fully offset the rise in the price of jet fuel, which is the group's single-largest expenditure item," it said. Scoot is Singapore Airlines' budget arm.
Concensus-beating results on strong demand
The airline's full-year profit more than halved year-on-year, largely due to a S$1.1 billion one-time gain in the year-ago period from the integration of its Vistara joint venture into Air India.
Losses from Air India, in which the group owns a 25.1% stake, further compounded the decline.
The company's net profit of S$1.18 billion (US$927.09 million) still beat Visible Alpha's consensus estimate of S$1.08 billion, and its operating profit rose 39% due to "healthy demand" for air travel during the reporting period.
The group carried a record 42.4 million passengers this year, with passenger yields — a measure of revenue per passenger kilometre — recovering in the second half after pressure from intensified competition due to an industry-wide capacity expansion.
"We expect yield performance to remain robust, with yields at full-service carrier SIA to rise by double digits Y/Y in FY27F and mid-single digit at Scoot," said DBS equity research analyst Tabitha Foo.
"Nonetheless, this will only partially offset the higher fuel burden, with meaningful margin compression ahead."
Singapore Airlines said it was wary of the Middle East developments and the duration of the conflict, adding that the conflict carried implications for supply chains and macroeconomic conditions that could affect demand.
It handed out a final dividend of 22 Singapore cents and a special dividend of 7 Singapore cents.
