Will costly fuel and geopolitical tensions derail SIA's road to profitability?

INVESTORS might be wondering whether Singapore Airlines' (SIA) road to profitability would now be derailed by soaring oil prices and safety concerns flying over Europe airspace sparked by Russia's invasion of Ukraine.

Brent crude has risen by about 60 per cent year to date, first boosted by increased economic activities and now a possible cut in supply due to increasing sanctions against major oil producer Russia. The liquid gold surged past US$115 a week ago and edged towards US$140 momentarily on Monday (Mar 7) as tensions between Russia and Ukraine intensified.

SIA incurred losses in fuel hedging amounting to hundreds of millions of dollars in FY2021 when Brent crude tanked in 2020 as global economic activities were hit and international border closures shut down air travel as the pandemic unfolded.