Analysts downgrade SIA, cut price targets amid lower Q1 profit, Air India losses

[SINGAPORE] Analysts downgraded their calls on Singapore Airlines (SIA) and slashed price targets for the national carrier after its profits plunged 58.8 per cent for its first quarter ended June.

On Tuesday (Jul 29) morning, SIA shares dived 8.7 per cent to S$6.94 in early trade.

Maybank downgraded the airline from a “hold” to a “sell” call, lowering its price target to S$6.75 from S$6.85 previously while CGS International (CGSI) downgraded SIA from “hold” to “reduce” and cut its price target to S$6.80.

Citing weaker-than-expected earnings from SIA and its share of losses for Air India, which SIA owns a 25.1 per cent sake in, CGSI analyst Raymond Yap on Monday said: “We downgrade our recommendation on SIA to reduce, and advise investors to take profit.

“SIA’s share price is now trading at a historical price-to-book-value of 1.45 times, close to 3 standard deviations above the mean since 2011, which we view as very rich.”

Similarly, Maybank analyst Eric Ong on Monday noted that Air India losses dragged on SIA’s bottom line in spite of lower fuel prices supporting operating performance.

“We … cut our FY2026 to FY2028 (estimates for) core earnings per share by 25 to 29 per cent to factor in rising non-fuel costs and weaker cargo business. We think the share price has run ahead of its fundamentals and downgrade SIA,” Ong said.

Air India losses could widen

SIA’s share of losses from Air India could increase, CGSI’s Yap said.

He estimates that the losses could be S$250 million for FY2026 and S$200 million for FY2027 – wider than S$75 million previously forecast.

While Air India’s weak results for Q1 FY2026 – which dragged on SIA’s bottom line – could have been due to one-off compensation provisions for the Jun 12 Ahmedabad plane crash, its subsequent financial performance could remain weak, Yap said.

This is in light of the 15 per cent cut in Air India’s wide-body international flights and 5 per cent reduction of its narrow-body flights in the immediate aftermath of the crash, Yap said, citing Reuters data.

Uncertain outlook for cargo business

Moving forward, SIA’s demand for air cargo could be affected by tariff uncertainty, Maybank’s Ong said.

He observed that the carrier’s air cargo demand had softened in June after previously being supported by front-loading activity as businesses pre-empted US tariffs.

“We believe the uncertainty over how the Trump Administration’s trade policies will evolve could hold back critical business decisions that drive economic activity, and with it the demand for air cargo.”

He noted that cargo flown revenue had slipped 1.9 per cent year on year as yields deteriorated 4.4 per cent, which was “worse than expected”.

Potential opportunity on Jetstar exit

Jetstar Asia’s closure on Jul 31 could present an opportunity for SIA as the group will ramp up capacity across various Asian destinations to fill the service gap after the budget airline exits, Maybank’s Ong said.

SIA’s low-cost arm Scoot will commence operations to Labuan Bajo and Medan (Indonesia), as well as Okinawa (Japan), subject to regulatory and operational approvals, he said.

Additionally, air travel demand is likely to stay healthy for Q2 FY2026 across most regions in view of the summer peak season, Ong added.