Air France-KLM reports profits drop, shares jump
As Air France-KLM reports a 59.4 percent slump, shares jumped 5.60 percent due to the outcome being higher that predicted5 August 2008
PARIS - Air France-KLM reported a 59.4-percent slump in net first-quarter profit on Tuesday but its shares jumped 5.60 percent because the outcome was higher than analysts had expected.
Net profit for the first quarter of 2008-2009 was EUR 168 million (USD 261 million) compared with an average forecast by analysts of EUR 148 million.
The price of shares in the airline rose by 5.60 percent to EUR 17.17 in morning trading.
The airline said the outcome was "in line with its target for an operating profit of about one billion euros" for the year.
In 2007-2008 operating profit was EUR 1.41 billion.
In the first quarter, the current operating profit was EUR 234 million, showing a fall of 43.6 percent from the equivalent period last year. This was in line with a forecast by analysts of EUR 232 million.
But the adjusted operating margin, a ratio of profit to sales, fell by 3.3 points to 4.5 percent.
In the quarter, the fuel bill was EUR 1.36 billion from EUR 1.09 billion 12 months earlier, or an increase of 24.3 percent.
The airline estimated its fuel bill for the whole of the current year at EUR 5.86 billion on the basis of an oil price of USD 126.82 per barrel.
Sales rose by 5.8 percent to EUR 6.288 billion and the number of passengers carried by 3.7 percent. Capacity rose by 5.1 percent. The seat-occupancy ratio fell by 1.1 points to 80.3 percent.
The airline said it would strengthen a cost-cutting plan with an extra EUR 190 million of savings, taking the target for 2008-2009 to EUR 620 million.
It had already made a saving of EUR 114 million in the first quarter.
Air France, in contrast to many airlines which are reducing capacity in response to high fuel costs and easing economic activity, is increasing capacity, albeit at a reduced rate.
[AFP / Expatica]