Singapore Airlines reported on Tuesday a 1.7 percent rise in third-quarter operating profit, helped by an unexpected growth from cargo and mail, while net fuel costs fell.

Profit reached S$293 million ($207 million) for the three months ended Dec. 31, S$5 million up from the same period last year.

The carrier, a barometer of the health of Asia’s airline industry, said “2017 is expected to be another challenging year amid tepid global economic conditions and geopolitical concerns, alongside other market headwinds such as overcapacity and aggressive pricing by competitors.”

The company has come under pressure due to weakening demand for full-service long-haul travel amid competition from low-cost carriers and Middle Eastern network carriers.

Operating profit in its main SIA brand fell 16.6 percent to S$151 million. Profit fell 9.1 percent in its Silkair regional airline, and was flat-to-slightly-higher for low-cost subsidiaries, Tiger Airways and Scoot.

SIA Cargo posted an operating profit of S$53 million, its best third quarter performance in nine years, due to stronger-than-expected demand. In the same period of last year, SIA Cargo only managed a S$2 million profit.

Net fuel costs declined $200 million, largely due to a $256 million reduction in fuel hedging loss, the company said.

Net profit fell 35.6 percent to S$177 million.

($1 = 1.4185 Singapore dollars)

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