Singapore Airlines sees no drop in business travel

By Daryl Loo and Jan Dahinten

SINGAPORE (Reuters) - Singapore Airlines (SIAL.SI: Quote, Profile, Research), the world's No. 2 airline by market value, sees continued demand from business travellers despite a slowdown in the world economy, but expects margins to be squeezed by sky-high fuel costs.

Singapore Air said on Tuesday it was still looking to expand through acquisitions, but saw hurdles to buying controlling stakes in airlines from emerging market countries.

The group, 55-percent owned by sovereign fund Temasek [TEM.UL], on Monday reported a 15 percent drop in first-quarter earnings due to costlier jet fuel, but earnings from partners helped it beat market expectations.[nSIN119059]

"So far, as we can gauge by the forward demand situation, it's holding up," Singapore Airlines Chief Executive Chew Choon Seng told reporters on the sidelines of a shareholder meeting.

"We don't see any signs of corporate travel fading away suddenly. There is still business going on around the world."

Shares of Singapore Air were down 0.4 percent by 0430 GMT, paring losses after dropping as much as 1.7 percent in early trade. The broader Straits Times index .FTSTI was down 1.2 percent.

The carrier, known for its "Singapore Girl" flight attendants, heavily relies on first and business class passengers, who generate about half of sales.

It has suffered five straight months of falling combined passenger and cargo loads as of June, as demand failed to keep pace with higher capacity that was partly boosted by the delivery of five Airbus A380 superjumbos.