It’s been a tough slog for Singapore Airlines (SGX: C6L), or SIA, this year.

After hitting a 52-week high share price of S$7.14 back in July last year, the blue-chip airline’s share price has trended steadily downwards.

As of this writing, SIA’s share price is hovering at S$6.35, down 1.6% year-to-date.

Singapore’s flagship carrier saw its share price surge 19.5% in 2023 but dipped slightly by 2% in 2024.

Can the airline see better days ahead with its share price recovering to its glory days of S$10 and above?

Lower profits

SIA reported a mixed set of results during the recent earnings season.

For the first nine months of fiscal 2025 (9M FY2025) ending 31 December 2024, total revenue increased by 3.3% year on year to S$14.7 billion, aided by record passenger carriage.

Total expenditure, however, jumped by 10% year on year to S$13.3 billion because of higher fuel costs.

As a result, operating profit plunged 34.1% year on year to S$1.4 billion.

Although net profit increased by 12.8% year on year to S$2.4 billion, this was because of a one-off exceptional gain from the disposal of Vistara.

Stripping this item out, net profit would have fallen by close to 40% year on year to S$1.27 billion.

Strategic initiatives

Despite the fall in profits, SIA continues to invest in strategic initiatives to enhance customer experience.

Back in November last year, the airline announced a S$1.1 billion multi-year programme new long-haul cabin products across its fleet.

During the last quarter, SIA also strengthened its airline partnerships.

In particular, Air India and SIA added 51 new codeshare destinations, increasing SIA’s network of locations and broadening options for customers.

As part of its fleet renewal programme, SIA has 81 aircraft on order.

The airline also ramped up flight frequency to Iloilo City in the Philippines and will start thrice-weekly direct flights to Vienna in Austria from June 2025.

IATA’s forecast for 2025

These initiatives should help SIA to stay competitive amid an increasingly crowded airline space.

While air travel demand surged in the aftermath of the pandemic’s end, this increase is beginning to taper off.

Demand is now returning to pre-pandemic levels of growth, as evidenced by the recent forecast for global air passenger demand.

The International Air Transport Association (IATA) expects global air passenger demand to grow by 8% year on year for 2025, following a record year in 2024.

While it is good news that there is still year-on-year growth, many airlines are now well-equipped to handle the increased volume, thereby translating into stiffer competition for SIA.

Tariffs and inflation

Apart from competition, SIA also has to contend with the uncertainties brought about by President Trump’s tariff proclamation.

As of this writing, these reciprocal tariffs have been paused for 90 days, giving businesses and countries a temporary reprieve.

However, no one can be sure how negotiations will go between the US and its trading partners, and these tariffs could hit with full force in the coming weeks or months.

The immediate impact of higher tariffs is an overall increase in the cost of goods and services for a wide swath of businesses.

As time goes by, these higher costs will be passed on to consumers, resulting in higher inflation.

With higher prices, consumers may also tighten their wallets and hold back on discretionary spending, thus impacting the airline and travel industries.

A potential global recession

Investors are also concerned about the outbreak of a full-scale trade war between the US and China as both are levying increasing tariffs on each other.

Should this trade war spiral out of control and involve other countries or blocs such as Canada and the European Union, it could result in a global economic slowdown.

Such a scenario will lead to lower spending amid a weak economy which will take time to work itself out.

While this may seem like a worst-case scenario, it seems a distinct possibility at a time when both the US and China refuse to back down.

SIA may be badly impacted should there by a widespread slowdown as passenger and cargo volumes will both plummet.

Get Smart: Stormy skies ahead

SIA is facing multiple headwinds.

The uplift from the pandemic reopening is all but gone, and the resulting normalcy means that competition should also stiffen moving forward.

Tariffs threaten to add another source of uncertainty and may cause inflation to increase and costs to spike, leading to lower demand and profitability for the carrier.

SIA is flying into stormy weather ahead and it may take a while for the skies to clear up.

Investors should continue to monitor the tariff developments while scrutinising the airline’s plans and commentary.

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Disclosure: Royston Yang does not own shares in any of the companies mentioned.