Air France-KLM: sales, operating profits take off

23rd November 2006, Comments 0 comments

PARIS, Nov 23, 2006 (AFP) - The French airline Air France-KLM reported a 7.8-percent rise in second-quarter operating profit on Thursday owing to strong passenger traffic, but net profit slumped on exceptional factors.

PARIS, Nov 23, 2006 (AFP) - The French airline Air France-KLM reported a 7.8-percent rise in second-quarter operating profit on Thursday owing to strong passenger traffic, but net profit slumped on exceptional factors.

The price of shares in the company fell after statements that the airline was discussing alliance prospects with Italian airline Alitalia.

Operating profit for the July-September period rose to EUR 568 million despite a 29-percent increase in the cost of fuel from the equivalent figure last year.

Net profit fell by nearly half to EUR 374 million from EUR 717 million because the figure 12 months ago had been boosted by a capital gain of EUR 419 million from the sale of a stake in airline booking system Amadeus.

Excluding this factor, net profit rose by 25.5 percent.

The price of shares in the company fell sharply by 6.79 percent to EUR 30.06 while the overall market as measured by the CAC 40 index was essentially unchanged. However, the share has risen by almost 70 percent so far this year.

Brokers Société Générale said that the factors which had driven the share up this year were now represented in the price and that the share could suffer from persistent concerns among some investors that Air France-KLM might make an alliance with Alitalia.

Meanwhile, in Italy, the price of Alitalia shares surged by 4.32 percent to EUR 0.98 after Air France chief executive Jean-Cyril Spinetta had said that Air France-KLM had begun a phase of "exploratory exchanges" which could result from an alliance. Alitalia also said that the two companies were in "initial and non-exclusive" talks.

Alitalia is struggling to overcome persistent financial problems, and Air France-KLM has said that it might be interested in an alliance once the airline has been reorganised.

Air France-KLM stood by a target for a marked increase in its operating profit this year from the figure of EUR 936 million in 2005-2006, managing director Pierre-Henri Gourgeon said.

Sales rose by 8.8 percent to EUR 6.13 billion in the second quarter.

The group, which includes the Dutch airline KLM, said: "Passenger transport activity remained very dynamic for Air France-KLM in the second quarter, continuing the trend noted since the beginning of the year."

Operating profit in this division rose by 18.8 percent to 505 million euros.

In the quarter, traffic and capacity had increased by 5.2 percent. The seat-occupancy ratio had been steady at 84.2 percent.

Gourgeon said: "Consequently we increased the yield (profit per passenger) which was the objective." Earnings per seat per kilometre flown had increased by 4.7 percent.

But the freight division had made an operating loss of EUR 6 million from a profit of EUR 34 million in the same period a year earlier, "owing to competition, particularly in the Asian zone", the airline said.

Group debt had been reduced since the end of March by EUR 530 million to EUR 3.85 billion.

Copyright AFP

Subject: French news

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