The world's second largest airline with a market value of $10.5 billion after Air China (601111.SS) said both passenger and cargo yields would remain under pressure after it reported a bigger-than-expected 53 percent fall in quarterly profit on Thursday.

The global airlines industry has been struggling to pass on higher cost of fuels to customers as demand for business and leisure travel dwindles due to the global economic slowdown.

"Forward bookings continue to show signs of weakness in the final quarter of the financial year, due to uncertainty in the global economy and the protracted Eurozone debt crisis," Singapore Air (SIAL.SI) said in a statement.

"Passenger yields are expected to remain under pressure while cargo yields are expected to continue to decline," it said, adding that air cargo market remained weak due to weak consumer demand in major developed economies.

The carrier, around 55 percent owned by Singapore state investor Temasek Holdings Pte Ltd, reported net profit of S$135.2 million for October-December, down from S $288.3 million a year ago.

The profit was lower than an average forecast of S$162.5 million from four analysts polled by Reuters.

Singapore Air, whose primary customers are business travellers, has been badly hit by a slowdown in corporate travel as major companies, mainly financial firms, are cutting costs. The airline said its fuel bill rose 33 percent in the quarter from a year ago.

This is the fourth straight quarter when Singapore Airline's profit has missed analysts' forecasts, according to data from Thomson Reuters StarMine. The airline's October-December revenue was little changed at S$3.88 billion.

Singapore Air's share of passengers travelling through Changi Airport has been falling, while budget carriers such as AirAsia Bhd (AIRA.KL) and JetStar, a unit of Australia's Qantas Airways Ltd (QAN.AX) have been gaining market share.

Late last year, the International Air Transport Association (IATA) cut its forecast for airline industry profits by a quarter to $3.5 billion for 2012 and warned the industry could plunge to an $8.3 billion loss if Europe's debt problems trigger another banking crisis.

Singapore Air's rivals in East Asia such as Cathay Pacific (0293.HK) and Chinese carriers have benefited from a large exposure to China.

The company's shares have fallen by about a quarter since the end of July on concerns about the global economy, while the broader market index .FTSTI shed about 10 percent.

(Editing by Anshuman Daga)

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