Singapore Airlines said annual profit climbed to a new high, though it warned that tariffs and trade uncertainty cloud the outlook for the industry.

The city-state's flag carrier said Thursday that net profit rose 3.9% to a record 2.78 billion Singapore dollars, equivalent to US$2.14 billion, for the year ended March. Profit was boosted by a one-off noncash accounting gain of S$1.1 billion from the Air India-Vistara merger, which was completed in November.

Looking ahead, Singapore Airlines said the "industry faces a challenging operating environment amid changing tariff policies and trade tensions, economic and geopolitical uncertainties, and continued supply chain constraints."

These factors could affect consumer and business confidence, which in turn could weigh on passenger and cargo markets, it said.

"While global uncertainties remain, the group is in a strong position to focus on profitability, while pursuing growth opportunities and ensuring long-term value creation for shareholders," the airline said.

Travel demand in the city-state has been robust. Passenger traffic at Singapore's Changi Airport recovered strongly after the pandemic, reaching a new high of 68.4 million passenger movements in the year through March. The airport, one of the busiest in the world by international passenger traffic, on Wednesday began construction on a new terminal that is estimated to boost Changi's capacity by over 50%.

Singapore Airlines and its low-cost carrier Scoot carried a record 39.4 million passengers in total during the fiscal year, up 8.1% from the prior year.

The record number of passengers carried helped to partly offset pressure from rival airlines adding capacity, Singapore Airlines said.

The carrier's 6.4% passenger-traffic growth lagged capacity expansion of 8.2%. Softer yields pushed operating profit down 37%.

Analysts caution that Singapore Airlines' passenger yields could remain under pressure in the face of rising industry capacity and competition, and are watchful of potential airfare cuts this year to drive demand.

Cargo flown revenue rose 4.4%, supported by strong demand for e-commerce and perishables, as well as due to spillover from sea freight disruptions, the carrier said.

Still, cargo yields fell 7.8% due to increased competition.