The global economic recovery may be taking hold, but it hasn't translated into earnings at Singapore Airlines (SIA) as supply is outpacing demand, the carrier told CNBC.
"The developed economies are recovering. We do see, for example, in Europe and the U.S., recovery in demand for travel," said the carrier's CEO Goh Choon Phong.
"The economy in this part of the world is also growing, but there's a lot more capacity being added. So, when there is imbalance in terms of growth in demand and growing capacity, you have an issue," he added.
The carrier's earnings over the past year have certainly suffered. It posted an operating loss of 60.3 million Singapore dollars ($48.33 million) in the fourth quarter from the year before, wider than the 44.2 million Singapore dollar operating loss posted in the same quarter in the previous year. Analysts had expected an operating profit of 42 million Singapore dollars, according to a Reuters poll.
"The parent airline's yields have now declined for 11 consecutive quarters, making it the airline's worst series of results since pre-Asian financial crisis (1994-1997)," CIMB said in a note, adding that "heavy competition" is eating away at yields.
SIA is moving to adjust its capacity to improve yields rather than try to keep its market share.
"We adjust our supply according to what we think the demand is," Goh said. "We have always been quite dynamic on adjusting our frequency, adjusting our capacity."
It isn't clear whether regional overcapacity will ease anytime soon. Citigroup expects Southeast Asian carriers to increase their capacity by around 9.5 percent this year, with traffic growing only around 9.3 percent amid the impact from the political turmoil in Thailand.
Losses at SIA affiliates aren't helping the company's outlook. Its 40 percent-owned Tiger Airways reported losses of 223 million Singapore dollars for the year. In addition, the budget Scoot unit wasn't mentioned in the results.
"We again infer that it continues to struggle," Credit Suisse said in a note. "With only six aircraft, it is subscale in all of its markets and its growth no doubt contributed to Singapore Airlines' run up in costs, which firmed 1 percent despite a drop in fuel costs."
—By CNBC.Com's Leslie Shaffer; Follow her on Twitter