Singapore Airlines, the world’s second-largest airline by market value, said it will be cautious about adding capacity as yields remain below pre-crisis levels.

“We’re not out of the woods yet,” Chief Executive Officer Chew Choon Seng said today. Singapore Air, which said advance ticket bookings are “encouraging,” aims to increase capacity by 2% in the fiscal year ending in March.

 

Goldman Sachs Group Inc. today cut the airline’s rating on concerns about the carrier’s ability to raise fares in the short term after yield, or the average price a traveler pays to fly one kilometer, was lower than its estimates. Singapore Air on May 21 posted its second straight quarter of profit, averting its first annual loss in at least two decades, as travel bounced back from the worst financial crisis in more than six decades.

 

“The challenge for us is to sustain the recovery not only just in loads, but also in yields,” Chew said in a post-results briefing in the city. “We have exercised caution in putting back capacity because as we have observed, the world is a fragile place to be in right now, particularly in financial markets, which has a direct bearing on the market segment which we are especially strong in.”

 

Singapore Air’s passenger yield declined to 11.1 cents during the three months ended in March from 11.8 cents a year earlier, according to a May 21 statement. The measure of profitability hasn’t yet returned to pre-crisis levels, Chan Hon Chew, the carrier’s senior vice president in charge of finance said at the same conference.

 

James Tong, chief executive officer of Cathay Pacific Airways Ltd.’s Hong Kong Dragon Airlines unit, also said today passenger yields have “still not reached pre-crisis levels, but it’s getting closer.”

 

Singapore Air gained 0.4% to $14.22 in the city- state today. The stock has fallen 4.8% this year compared with the Straitts Times Index’s 6% decline.

 

Goldman cut the rating on Singapore Air stock to “neutral” from “buy.”