Singapore Air, the world's second-biggest airline by market value behind Air China, took delivery of the first of 19 Airbus A380 superjumbo in October after a two-year delay.

It has been able to charge ticket premiums of up to 20 percent on the daily Singapore-Sydney route, and will start a daily flight to London from the middle of March after receiving its third A380.

But analysts warn that premium business travel will be cut sharply this year due to the chaos in world financial markets and a likely US recession.

The International Air Transport Association (IATA) last month chopped its 2008 industry profit forecast by a third, warning that spiralling fuel costs and the impact of the credit crunch would reverse expected growth.

Singapore Air said demand for air travel in the January-March quarter, as reflected in advance bookings, remained firm.

'Beyond the near term, however, the prospects are uncertain, with financial markets under stress and growing concerns about potential recession in America,' Singapore Air said in a statement.

Singapore Air said October-December operating profit was S$675 million compared with S$448 million a year earlier and beat an average forecast of S$536 million from three analysts polled by Reuters.

The carrier, 55-per cent owned by state investment firm Temasek Holdings , said sales grew 13 per cent in the final three months of 2007, countering soaring jet fuel prices which peaked at $117 a barrel in November.

'Pricing of futures indicates that oil prices will hold at current high levels, and expenditure on fuel will be partially mitigated by hedging and recovery of incremental costs from surcharges,' Singapore Air said.

Net profit for Singapore Air, 55-per cent owned by state investment firm Temasek Holdings , was S$590 million in the period against S$589 million a year ago.

Last year, the company booked a one-off gain from the sale of its stake an aircraft leasing associate.

Singapore Air's bid to increase its exposure to the booming China market suffered a setback after shareholders of China Eastern Airlines last month rejected its efforts to buy a stake in the mainland carrier. The deal had met strong resistance from rival Air China.

Singapore Air shares dropped 6.6 per cent in October-December, in line with the benchmark Straits Times index , but underperformed regional rivals Qantas, which fell 2.5 per cent, and Cathay Pacific, which lost 4 per cent.

Singapore Air's fiscal year to March 31, 2008 net profit is expected to drop 14 per cent to S$1.83 billion from S$2.13 billion a year ago, according to 12 analysts polled by Reuters Estimates before Friday's results. -- REUTERS