Shares of Singapore Airlines (SIAL.SI) fell as much as 4.2% on Wednesday, extending losses from the previous session, after several brokers warned that the carrier faces a challenging outlook amid global economic weakness and high jet fuel prices.
The general sentiment in the market has also been hit by worries about the health of major economies due to weak U.S. data and Europe’s festering debt woes.
At 9:27 a.m., SIA shares were down 2.7% at $12.24 on a volume of 1.5 million shares, around half the average daily volume in the last 30 days. The broader Straits Times Index <.FTSTI> was 1.8% lower.
Standard Chartered said in a report that although SIA has moderated its capacity expansion for 2012 fiscal year to 5% from 6%, an industry-wide increase in capacity is likely to intensify competition.
This is expected to result in slowing passenger demand growth and a lower base yield, Standard Chartered said, adding that economic uncertainties in the U.S. and Europe as well as high fuel prices present further potential headwinds.
The bank downgraded SIA stock to underperform from in-line and cut its target price to $12 from $12.50.
SIA posted a net profit of $44.7 million in the quarter ended June 30, compared to $252.5 million a year ago. Four analysts polled by Reuters had on average forecast the figure at $165.6 million.
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