But the carrier, one of the world's premier airlines, warned that volatile oil prices remain a concern as they could slow down global economic growth and dampen demand for air travel.

SIA reported half-year net profit of S$616 million, reversing a $7 million loss in the same period last year due to the Severe Acute Respiratory Syndrome outbreak in East Asia.

Revenue for the period totalled $1.61 billion, up 38.5 percent.

For the quarter to September, net profit was up 17 percent year-on-year to $357 million despite oil prices breaching $50 a barrel last month.

Like other airlines in the region, SIA reeled from the impact of the SARS outbreak as travellers stayed away from the region to avoid contracting the disease, which killed nearly 800 people worldwide.

Compared with 2002 figures to eliminate the SARS factor, half-year net profit was up 25.2 percent, the company said in a statement.

"The outlook for travel remains encouraging and the air cargo industry is expected to expand on the back of healthy growth in Asia, with China continuing to be an important growth engine," the airline said.

Tourist arrivals in Singapore remained robust, rising 18 percent from a year earlier to 658,224 in September, the tourism board said earlier Thursday.

SIA however said that apart from soaring oil prices, increasing competition from budget carriers will continue to put pressure on the bottom line.

It noted that two new no-frills airlines based in Singapore -- one of them, Tiger Airways, is 49 percent owned by SIA -- have started operations and a third will be launched later in the year.

"Strong global demand and concerns over disruption to crude oil supply from major oil producers continue to push up fuel prices.

"Amplified by speculative trading activities in the market, fuel prices are expected to stay volatile. High fuel price may slow down the global economy and dampen demand for air transportation," the carrier said.

"Amid these uncertainties and increasing challenges, the SIA Group will continue to push for strengthening of its market leadership position while pursuing the streamlining of cost structure to remain competitive."

World oil prices have risen to unprecedented heights at above $55 a barrel and although prices fell below $52 on Thursday, analysts said the market remained volatile.

The International Air Transport Association (IATA) said losses for global airlines may well exceed the $3-4 billion forecast this year if oil prices stay at record highs, despite an increase in passenger traffic.

IATA director-general Giovanni Bisignani said Wednesday that global passenger volumes rose 17.7 percent in the nine months to September, while cargo volumes improved 14.1 percent.

Airlines are poised to achieve 14 percent growth in passenger traffic this year.

"People are travelling again. Every region is reporting double-digit growth. Traffic clearly is rebounding from 2003, which was an exceptionally bad year," he said.

"The sad story is that, despite these improvements, the bottom line is worsening with the extraordinary price of fuel. If current fuel price levels persist, losses may well exceed the US$3-4 billion previously forecast for 2004."

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