SINGAPORE – Shares of Singapore Airlines fell after the city-state's flagship airline reported an almost 50% drop in net profit for the April-September first half, blamed on lower revenues and increased competition.

When markets opened on Monday, the stock fell as much as 6.2% before later recovering to trade 3.57% lower.

Net profit in The first half of the financial 12 months was 742 million Singapore dollars (US$559.12 million), 48.5% lower than the 1.44 billion SG dollars in the identical period last 12 months.

The company's operating profit fell 48.8% to SG$796 million, in comparison with SG$1.55 billion a 12 months ago, while revenue rose 3.7% to SG$9.5 billion.

Despite the drop in profits, the airline maintained an interim dividend of 10 Singapore cents per share.

Singapore Airlines said in a news release that the decline in operating profit was as a consequence of “increased capacity and increased competition in key markets,” which led to a decline in revenue and ultimately profit.

At an earnings call, SIA chief business officer Lee Lik Hsin said the corporate is seeing tougher competition globally, adding that other airlines are returning to their pre-Covid capability.

SIA CEO Goh Choon Phong also said the restoration of capability also put greater pressure on returns in comparison with last 12 months.

Passenger traffic grew 7.9% from a 12 months ago, but that was smaller than the 11% expansion in passenger capability, Lee said. This signifies that the passenger load factor – which measures the utilization of the airline's passenger capability – fell by 2.4 percentage points year-on-year to 86.4%.

However, SIA “will not hold back capacity growth just because there is competition in the market,” Lee added.

While demand for air travel is predicted to be robust within the second half of the financial 12 months, “the operating landscape will continue to be competitive,” SIA added.

Last Monday, SIA announced a cabin retrofit value 1.1 billion Singapore dollars program for its 41 long-haul and ultra-long-haul Airbus A350 jets.

The airline said the primary upgraded long-haul jet will enter service by 2026 and this system will likely be accomplished by 2030.