Singapore Airlines Ltd. slumped as much as 9.4% Wednesday after warning competitive pressures and rising costs could hurt its outlook.

Passenger yields — an indicator of revenue — are continuing to come under pressure from increased competition, while geopolitical and economic uncertainties have the ability to weigh on business sentiment and demand for air travel, the airline operator warned.

The airline late Tuesday had reported a rise in third-quarter profit of 5% from a year earlier to S$659 million ($490 million). Revenue for the three months ended Dec. 31 was also up 5% to an all-time quarterly high of S$5.1 billion. Net fuel costs after hedging, however, increased 9.1%.

“High fuel prices and inflationary pressures, as well as supply chain constraints, also present a more challenging operating cost environment globally for airlines,” the company said.

In the first nine months of the financial year, net income climbed 35% to S$2.1 billion on revenue of S$14.2 billion, both all-time highs. Singapore Air made as much profit in nine months as it did in the whole prior fiscal year, and it had a record taking back then. Its current performance comfortably puts it on course for new all-time highs. 

The airline’s monthly capacity had rebounded to 93% of pre-Covid levels by December and its load factor — a metric of how busy its planes are — remained close to 90%. That’s seen the carrier extend its lead over key regional rival Cathay Pacific Airways Ltd., which has been struggling in recent months to staff flights owing to pilot shortages. 

The continued strength in travel demand is likely to underpin Singapore Air’s earnings in the current quarter, even as the outlook for fuel costs, one of the biggest expenses for an airline, remains uncertain. 

Asian jet fuel prices have climbed since the start of the year amid shipping chaos in the Red Sea and tighter supplies, though oil prices are expected to remain moderate this year.

Air cargo continues to lag for airlines like Singapore Air after the burst provided by Covid fades. Revenue in its freighter unit fell 35%, or S$303 million, in the recent quarter to S$559 million. Cost growth of 9.8% however outstripped revenue growth, chipping away at profits.

Still, on the flip side, routes are coming back after the pandemic.

During the third quarter, Singapore Air reinstated services to Chongqing and Xiamen, while low-cost arm Scoot resumed flights to Kunming. 

The carrier as a group now operates to 23 destinations in China, compared to 25 points pre-pandemic. Scoot also resumed operations to Chennai in India, and restructured its direct flights to Athens and Berlin by operating three-times weekly Singapore-Athens-Berlin services.

Wednesday’s share price decline trimmed the increase in Singapore Airlines’ shares this year to around 4%.