Air France-KLM sales overcome cost of fuel

18th May 2006, Comments 0 comments

PARIS, May 18, 2006 (AFP) - Air France-KLM, Europe's biggest airline group, reported a 29.3-percent rise in full-year net profit on Thursday, saying strong growth in passenger numbers had compensated for a surge in the cost of aviation fuel.

PARIS, May 18, 2006 (AFP) - Air France-KLM, Europe's biggest airline group, reported a 29.3-percent rise in full-year net profit on Thursday, saying strong growth in passenger numbers had compensated for a surge in the cost of aviation fuel.

Air France-KLM, formed from a merger in 2004 of Dutch airline KLM and the French national carrier, said its net profit totalled EUR 913 million in the 12 months to the end of March 2006.

In the previous 12 months, net profit was estimated at EUR 706 million before the withdrawal of KLM pension funds and on a pro-forma basis, which means using a comparable asset base.

"Our 2005-2006 period was characterised by two economic events: strong growth worldwide which led to extremely dynamic operations, and a strong increase in the price of oil," said chief executive Jean-Cyril Spinetta at a press conference.

"In this environment, our group has confirmed the success of its merger," he added.

Air France-KLM reported a 32-percent rise in its fuel bill to EUR 3.59 billion in the year to March, but said that passenger numbers increased by 8.6 percent.

Deputy chief executive Pierre-Henri Gourgeon said the medium-haul activities of the group in Europe had returned to profit after a loss of EUR 133 million the year before.

He also pointed to growth in revenues from long-haul flights.

"Business traffic on long haul is growing strongly," he said.

For the 2006-2007 period, the group forecast a further rise in fuel costs to EUR 4.4 billion, but said it had fuel hedging coverage — the practice of buying kerosene in advance — for 75 percent of this.

Aviation fuel prices, like gasoline or petrol, are linked to the price of crude oil, which has nearly doubled in the past two years and has increased by 45 percent in the last 12 months.

Airlines have responded by levying extra charges on long-haul flights to compensate for the increase in costs.

In April, Air France raised its fuel surcharge by seven euros to EUR 51 per one-way long-haul flight, the sixth increase since the carrier introduced a fuel supplement in May 2004. KLM upped its fuel surcharge by five euros to EUR 45 last month.

Operating profit before aeronautics divestments for the group rose 69.3 percent to EUR 936 million in 2005-06, compared to a pro-forma operating profit of EUR 553 million in 2004-05.

This confirmed the group's predictions of "a very good year" in operating profit terms. Gourgeon forecast that 2006-07 operating profit would be "at least as good" as in 2005-06.

Turnover increased 10.2 percent to US $21.44 billion dollars in 2005-06.

Air France-KLM said it would offer a dividend of 30 centimes per share for 2005-06, double that of 2004-05.

Copyright AFP

Subject: French news

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