SINGAPORE, Nov 4 — Singapore Airlines Ltd said it will be vigilant on costs as it warned yet again that the weak operating outlook is likely to persist amid excess capacity and aggressive pricing by competitors.

The prospects for most major economies remain "tepid”, while passenger airline business continued to be impacted by geopolitical uncertainty and weak global economic conditions, Singapore Air said in a statement yesterday. 

The premium carrier reported its first quarterly slump in two years, saying passenger and cargo yields — a key measure of profitability in the industry — continue to be under stress.

Singapore Air and its other premium rival Cathay Pacific Airways Ltd. are fighting to revive profit growth as Middle Eastern carriers, offering comforts such as in-flight shower, lure first- and business-class passengers away, while budget carriers chip away at the economy end. 

Both the Asian airlines have warned of tougher days ahead, while Cathay said last month that it is conducting a "critical review” of its business after scrapping its profit outlook.

"How they arrest the declining yields will be the key issue for Singapore Airlines,” said Shukor Yusof, founder of aviation consulting firm Endau Analytics. 

"Singapore Air faces extreme competition and is suffering as much as Cathay. They are banking on flights to the US going forward.”

Shares of Singapore Air fell 1.3 per cent to S$9.98 (RM30.22) as of 9:06am today.

The stock has dropped 10.8 per cent this year, compared with a 3.2 per cent decline in the benchmark Straits Times Index.

Singapore Air — the only Asian airline to have flown the Concorde and the first in the world to fly the A380 superjumbo — said yesterday that net income tumbled 70 per cent to S$64.9 million ($46.8 million) in the three months through September from a year earlier. 

Sales fell about 5 per cent to S$3.65 billion. 

The yield, or the amount earned by carrying a person per one kilometer, dropped 3.8 per cent to 10 cents in the quarter.

Cathay reported an 82 per cent drop in first-half profit amid growing competition from Chinese carriers and decline in premium travel demand. Passenger yields for the Hong Kong-based airline dropped 10 per cent from a year earlier to 54.3 Hong Kong cents in the January-June period.

Fuel costs at Singapore Air fell about 22 per cent to S$946.4 million in the quarter through September, while fuel hedging losses narrowed to S$146.3 million from S$306.3 million a year ago, the carrier said in the statement.

Singapore Air has been looking to build alliances abroad as part of a multi-hub strategy. 

It partnered with India’s Tata Group to start Vistara in January 2015 and owns about 23 per cent of Virgin Australia Holdings Ltd. 

The company has also teamed up with Deutsche Lufthansa AG under a revenue-sharing agreement on flights to Germany and Southeast Asia.

Singapore Air started flying its Airbus Group SE 253-seat A350 aircraft to Amsterdam from May 9. 

It began direct flights to San Francisco last month and it will receive the ultra-long-range version of the plane in 2018 for services to New York, which will become the world’s longest non-stop flight. — Bloomberg