In a letter to staff released publicly, Chew said a good relationship with employees was vital to SIA's future as the airline tries to maintain its place in the market by fending off competition, especially from new low-cost carriers.

"I want to state clearly that our people in SIA are crucial to the continuing success of our company," Chew said in the letter.

He also sought to dispel perceptions employees are being forced to make sacrifices so that higher level management can benefit.

"I want to take this opportunity to reassure you that this is not how SIA operates, and this is not how we have built this outstanding airline," said Chew.

"We must and will continue to operate on the principles of trust, meritocracy and fairness."

The carrier, majority owned by Singapore's government, has been embroiled in a simmering dispute with employees who are unhappy with the wages cuts and unpaid leave forced upon by management to cope with the financial fallout from the Severe Acute Respiratory Syndrome (SARS) outbreak last year.

Leading the dissent against SIA was the Air Line Pilots' Association of Singapore which voted to sack their union leaders in November for agreeing to the wage cuts, forcing Senior Minister Lee Kuan Yew, also Singapore's founding father and first prime minister, to step in to resolve the spat.

The pilot's union, in a meeting with Lee last week, had said SIA management had kept staff in the dark about policy changes and dismissive of suggestions on ways to improve the airline.

"We will communicate to everyone involved and affected the reasoning behind the changes and will be open to a dialogue to question and challenge key ideas and assumptions, as well to suggestions for alternative solutions," Chew said in the letter.

"In this way, we hope to arrive at more practical and robust solutions, to help sustain our competitive position."

Chew said SIA still had to contain its costs even though the carrier was on track to achieve a net profit of SA$600 million (USA$355 million) in the year to March 2004 as targetted.

"Unless SIA's costs are well managed, profits will come under pressure and SIA's continued growth and survival will be at risk," Chew said.

"We need to work smart and work hard at cost reduction. Work with me to look out for cost efficiency."

SIA is making a solid recovery from the SARS-induced travel slump after December net profits more than doubled from a year earlier to $377.9 million.

The carrier said its better-than-expected third quarter performance "was mainly due to cost reductions" and predicted passenger traffic in the next six months should be better than for the same period in 2003, as long as the bird flu outbreak did not develop into something as disastrous as SARS.

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