Singapore Airlines Ltd., the world's largest carrier by market value, reached agreement with pilots on pay and other benefits after a year of negotiations.

The accord "forms the basis of a Points of Agreement that has been signed", Singapore Airlines spokesman Stephen Forshaw said in an e-mailed statement that called the wage negotiations "challenging".

Agreement came as global air-passenger traffic fell for the first time in five years in September with the economic slowdown and credit-market crisis curbing travel.

Singapore Airlines last month reported a decline in load factors amid falling demand, prompting it to cut flights to cities in Japan, South Korea, India, Malaysia and Vietnam.

"The bottom line is to reduce costs," said Steven Lim, who manages about US$200 million at Daiwa SB Investments in Singapore. "An agreement would certainly help as the operating environment gets adverse and the airline reorganizes routes."

The terms have been backdated to November 2007 and are valid for three years, Singapore's The Business Times reported on Nov. 8.

The operating environment in the aviation industry has become more challenging, the newspaper said, citing Captain P. James, the head of the Air Line Pilots Association of Singapore.

The city-state's Ministry of Manpower played a critical role in facilitating the agreement, the newspaper said.

Singapore Airlines on Nov. 6 said quarterly profit fell 36 percent, the biggest decline in more than three years, after it paid more for jet fuel and filled fewer seats.

Net income dropped to S$323.8 million (US$219 million), or 27.1 cents a share, in the three months ended on Sep. 30, from S$507.8 million, or 40.3 cents, a year earlier, the carrier said.