Singapore Airlines, the world's biggest airline by market value, on August 1 reported a 26 percent fall in quarterly profit in the absence of one-off gains booked the previous year.

Net profit at the state-controlled airline fell to S$424 million (US$279 million) in the three months to the end of June, from S$575 million in the previous year when the result was helped by a one-off gain of S$223 million from the sale of property.

Singapore Airlines warned investors in May that it faced limited capacity growth because of the delayed delivery of the Airbus A380 superjumbo -- now due to arrive in October -- high jet fuel prices and uncertainty over the U.S. economy.

Singapore Airline's shares have risen around 9 percent so far this year, beating Cathay Pacific Airways' 7 percent rise but lagging an 11 percent increase in shares in Qantas Airways. The Singapore stock market is up 18 percent this year. The price of jet fuel, the single-biggest cost item for airlines, has climbed a fifth but is still 6 percent below a record high of US$93.20 a barrel set in August 2006.

Singapore Airlines, the city-state's only global brand, is among the world's most profitable airlines thanks to its focus on cost and efficiency. In January, it said it would outsource some of its call centre operations in Australia and North America.

The airline is in talks, which have dragged on for a year, to buy a stake in loss-making China Eastern Airlines, the smallest of China's three main carriers.

Analysts say Singapore Airlines, which focuses on business travellers, faces a static home market with the days of big traffic growth behind it and could benefit greatly from getting a foothold in China's commercial capital Shanghai as demand for air travel rises in Asia's second-largest economy.

Majority-owned by state investment firm Temasek and valued at US$16 billion, Singapore Airlines is the cheapest stock among leading Asian carriers, trading at nearly 14 times forecast earnings against multiples of 14.8 for Cathay Pacific and 15.4 for Qantas.