Singapore Airlines experienced a decrease in profits during the first quarter due to increased fuel costs and reduced passenger yields.

The national carrier of Singapore announced on Wednesday that its net profit for the three-month period ending in June amounted to 452 million Singapore dollars, equivalent to approximately 336.8 million US dollars. This represents a significant decline compared to the previous year, when the net profit stood at 734 million Singapore dollars. The company attributed this decline primarily to higher net fuel costs and a 4.6% reduction in passenger yields, despite a notable 14% increase in the number of passengers carried.

There was a 38% decrease in operating profit, resulting in S$470 million due to increased expenditures. However, revenue experienced a 5.3% increase, reaching S$4.72 billion, which was driven by capacity expansion and an uptick in cargo load factor.

“Passenger yields are expected to stay below the previous year’s levels as more capacity enters the market, particularly in the Asia-Pacific region,” the airline said. However, Singapore Airlines expects air-travel demand to stay healthy in the coming months.

The airline industry is facing increased competition, supply chain limitations, rising costs due to inflation, and uncertainties related to geopolitics. Cargo and passenger yields, as well as the impact of high fuel prices, have been closely monitored by analysts.

Nomura analysts recently revised the company's fiscal 2025 net profit forecast downwards by 14% due to uncertainties surrounding tariffs and geopolitical trade implications.

They anticipate a decline in passenger yields due to intensified competition. Nomura has downgraded the stock from buy to neutral, citing a lack of driving factors and decreasing yields.

SIA confirmed that the proposed merger of Air India and Vistara, a joint venture of Tata Sons and SIA, is progressing as planned.

This merger will grant SIA a 25.1% stake in an expanded Air India Group, enabling it to enhance its presence in India and actively participate in the rapidly expanding aviation market.