SINGAPORE (REUTERS) - Singapore Airlines Ltd (SIA) expects earnings to be impacted by high jet fuel hedges and competition as it reported quarterly profit below market estimates.

SIA, which began selling tickets this week for a new premium economy class, said on Friday that operating profit fell to S$146.3 million (US$108.7 million) in October-December from S$151 million a year earlier. The result was below an average forecast of S$169.4 million in a Reuters survey of five analysts.

"The group had hedged 65 percent of its jet fuel requirements at an average price of US$116 per barrel, leading to a hedging loss of US$216 million compared with a gain of US$48 million last year, so the average jet fuel price after hedging was 1.9 percent lower year-on-year," SIA said in a statement.

The airline, 56 per cent owned by sovereign investor Temasek Holdings (Private) Ltd, reported third-quarter net profit of S$202.6 million, up from S$50.1 million a year earlier when earnings were hit by losses from associates and one-off items. "Airfreight demand has seen a moderate recovery recently, but competitive pressure on yield is expected to continue due to excess capacity in the market," SIA said.