Singapore Airlines is rewarding its workforce with a generous 7.45-month profit-sharing bonus in an effort to recognise their role in delivering the carrier’s highest-ever net profit of S$2.78 billion (US$2.14 billion) for the financial year ending 31 March. The payout, based on a long-standing formula agreed with staff unions, comes despite a dip in operating profit and a cautious outlook for the year ahead.

While slightly below last year’s record 7.94-month bonus, the latest windfall reflects management’s commitment to sharing the gains even as the industry navigates tighter margins and economic uncertainty.

A thank-you cheque in turbulent skies

The bonus lands at a time when SIA, like the rest of the aviation sector, is contending with rising competition, softer yields, and a complex geopolitical climate. Nonetheless, the airline's leadership chose to stick to its bonus formula, an uncommon move in a sector known for belt-tightening during uncertain times.

“This is based on a long-standing formula that has been agreed with our staff unions,” SIA clarified in response to media queries. It’s a nod to the trust and stability that underpin its labour relations, even in a shifting global environment.

Merger winds propel record profit

Behind the headline profit is a sizeable one-off gain of S$1.1 billion from the merger of Vistara, in which SIA held a 49% stake, with Air India. Finalised in November, the deal grants SIA a 25.1% stake in the enlarged Air India, giving it direct access to India’s rapidly expanding aviation market – a move both financially astute and strategically forward-looking.

While total group revenue rose 2.8% year-on-year to a record S$19.54 billion, driven by continued demand for air travel and cargo services, the underlying operational picture was less rosy.

Operating profit dropped by 37% to S$1.71 billion, with passenger yields – an industry measure of average ticket prices – falling 5.5% amid a surge in global airline capacity. More seats in the sky meant fiercer competition, forcing fares down and squeezing margins despite robust travel demand.

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Cargo sees a lift from global disruption

On the freight front, SIA saw a 4.4% rise in cargo revenue, thanks to rising demand for e-commerce and perishable goods, as well as shipping disruptions in the Red Sea. Still, freight yields declined 7.8% as market competition intensified – a trend seen across the sector. Cathay Pacific has flagged a dip in US-China air cargo volumes, while US carriers like Delta and American Airlines have scaled back their forecasts entirely.

Dividend trimmed, but eyes still on long-term value

In line with its more measured outlook, SIA has declared a final dividend of 30 Singapore cents per share, down from 38 cents last year. The move suggests the airline is keeping some powder dry amid what it describes as a “challenging operating environment” shaped by evolving trade policies, geopolitical tensions, and persistent supply chain issues.

SIA has struck a balance between rewarding its people and exercising financial prudence. It also signalled that future opportunities may lie in the shifting global flows of passengers and goods, where its extensive network gives it an edge.

“The Group is in a strong position to focus on profitability, while pursuing growth opportunities and ensuring long-term value creation for shareholders,” it said in its earnings statement.

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A strategic cruise at altitude

For business and HR leaders, SIA’s approach offers a compelling case study in steady-handed leadership. It has chosen to back its people with one of the region’s most generous bonuses, even as it navigates thinner margins and a more volatile market.

In a sector known for its boom-and-bust cycles, SIA’s approach is that, when you’ve got the tailwinds, bring the crew along for the ride, but keep an eye on the clouds ahead.