Despite recording a record revenue in the first quarter of 2026, Singapore Airlines posted a net loss of $59 million. Although the carrier served a record number of passengers, the historically high price of aviation fuel linked to conflict in the Middle East was too great a drain on profits.

Despite increasing revenue by 20%, a historic high, the profit of SIA fell from $231 million to $82 million after the airline paid $767 million for fuel, according to Channel News Asia. SIA’s net profit also dipped $32 million due to Q1 losses experienced by its associated carrier, Air India.

Singapore Airlines Is Outpaced By Soaring Operating Costs

Credit: Airbus

Singapore Airlines has expressed confidence in demand for passenger and cargo travel, but warned that prolonged conflict in the Middle East endangers sustainable air travel. SIA reported flying nearly 11 million travelers and hauling record-high air cargo volume, but this income paled in comparison to the volatile prices of oil, according to Reuters. Compared to this time last year, SIA recorded $144 million in net profit.

Fuel accounts for the greatest operating expense of any air carrier, so this unavoidable cost of doing business currently represents the greatest profit drain. SIA spent over $1.7 billion in Q1, representing a 78% increase just for fuel. The spike came after Operation Epic Fury was launched on February 28. The market has not yet stabilized due to uncertainty over the resolution of the conflict amidst ongoing hostilities.

The net operating profit drop of Q1 came in at just under 74%, but share prices remain stable with a slight increase of 0.78% on the day of the financial report, according to The Edge Singapore. The company press release stated:

“The [SIA] Group holds one of the strongest balance sheets in the airline industry. As of 30 June 2026, Group shareholders’ equity was $16.59 billion, down $0.67 billion from 31 March 2026.”

SIA Shares The Cost Of Turning Around Air India

Credit: Airbus

Singapore Airlines’ Q1 profit drop was further exacerbated by low return on investment in Air India, which is going through a major modernization and business model overhaul. SIA holds a 25% stake in the company owned by Tata Sons. The chairman of Tata Sons forecast that it will take as long as a decade to complete the transformation of Air India.

The carrier is changing legacy systems alongside fleet renewal while also rebuilding the workforce and company culture. However, persistent supply chain disruptions have bogged down progress, according to the chairman. SIA reaffirmed its commitment to the long-term goals of both airlines, describing the investment as a core tenet of its future multi-hub strategy.

Air India has been hampered by airspace closures over Pakistan since last year along with the closures after OEF which forced detours and raised fuel costs. It is also still recovering from the tragic crash of Flight AI171, a Boeing 787-8 Dreamliner bearing tail number VT-ANB, which claimed the lives of 260 people. It went down on June 12, 2025. Channel News Asia recounted SIA CEO Goh Choon Phong saying that the efforts to turn around Air India had “no shortcuts” but rather require a “long game” approach to fully mature.

The Air Industry Bears The Price Of Conflict In The Middle East

Credit: US Navy

Beginning in late February, the joint US-Israeli Operation Epic Fury against Iran has caused turmoil in the Gulf region and impacted freedom of navigation through the Strait of Hormuz, which has raised the cost of aviation fuel around the world. By turning the Persian Gulf into an active combat theater, the conflict sparked a severe supply-side shock and choked off vital air corridors.

Following the initial strikes, Iran retaliated by targeting key Gulf oil sources, striking the Riyadh refinery and the Ras Tanura export hub in Saudi Arabia. Iran has since weaponized the Strait of Hormuz, preventing freedom of navigation, and global exports of refined jet fuel plummeted by over 60% compared to before OEF. It remains to be seen when oil supply will normalize as the conflict drags on.