Singapore Airlines, the world's biggest airline by market value, reported a worse-than-expected second quarter loss as the global economic slowdown hit the carrier's higher margin business travellers particularly hard.

The company, which warned in July it could post a full-year loss if tough conditions last, reported a net loss of S$159 million compared to a net profit of S$324 million a year ago.

Five analysts polled by Reuters had estimated an average net loss of S$37.8 million.

Singapore Air has seen falling passenger and cargo demand this year as a global recession hurt business and leisure travel, forcing it to reduce capacity by 11% in the 12 months from April, and cut salaries as well as working hours of its staff.

SIA's capacity cut resulted in an improvement in its overall load factor but yields, or the amount of revenue per passenger, remain under pressure as it cuts prices to attract flyers.

SIA's share price has gained 26% since the start of the year, half the 53% rise in the broader market.