Oct. 27 (Bloomberg) -- Singapore Airlines Ltd., the world's second-largest carrier by market value, said fiscal first-half profit gained on higher travel demand and one-time items including the sale of a building.

Net income rose 50 percent to S$868 million ($554.4 million), or 70.8 cents a share, in the half year ended Sept. 30, the company said today. That compared with the S$875 million median estimate of seven analysts surveyed by Bloomberg News. Sales increased 10 percent to S$7.03 billion.

Chief Executive Officer Chew Choon Seng has been raising surcharges and hedging fuel needs to cope with record jet kerosene prices, the airline's single-biggest expense. The carrier flew a record nine million passengers in the first half as economic growth in Southeast Asia spurred travel.

To meet rising travel demand, Singapore Airlines this year ordered 40 more fuel-efficient planes and said it plans to buy nine more A380s, the world's biggest plane, from Airbus SAS. The 49 aircraft from Airbus and Boeing Co., the world's largest planemakers, are worth about $12 billion.

Traffic in the region is forecast to grow 6.5 percent a year until 2009, the International Air Transport Association, which represents about 260 carriers worldwide, has said.

The increase in Singapore Airline's net income for the half-year period was helped by a one-time gain of S$223 million from the sale of a building in downtown Singapore, which the airline booked in the first quarter. The company's operating profit dropped 8.7 percent in the first half.

The carrier's fuel costs rose 32 percent to S$2.6 billion in the six months ended September from the year before. Jet kerosene prices in Singapore traded at a daily average of $85.61 a barrel in the half-year period, almost 20 percent higher from $71.47 a barrel a year earlier, according to Bloomberg data. Prices surged to a record $93 a barrel on Aug. 8. It closed at $74.8 a barrel on Oct. 26.

Singapore Airlines shares rose 4.3 percent in the six months to September, compared with the 3.3 percent advance in the nine-member Bloomberg Asia Pacific Airlines index. The stock rose 1.3 percent to close at S$15.6 today.

To contact the reporter on this story: Chan Sue Ling in Singapore slchan@bloomberg.net

Last Updated: October 27, 2006 05:22 EDT