Air France-KLM shares soar on return to black

18th February 2016, Comments 0 comments

Shares in Air France-KLM soared Thursday after the group posted its first annual operating profit since 2008 on reduced costs, notably due to lower fuel prices.

The stock price of Europe's largest carrier was up 9.4 percent to 8.15 euros two hours into trading, as the carrier unveiled net 2015 profits of 118 million euros ($131 million).

"The group has published results which outstrip expectations," said analysts at broker Aurel BGC.

The airline had posted a 225-million-euro loss in 2014.

Chief financial officer Pierre-Francois Riolacci indicated lower fuel costs were clearly a boon, cutting the 2015 bill by 450 million euros, with the 2016 gain set to be around $2 billion.

The French-Dutch group was badly hit by the Islamist attacks on Paris in November, with an estimated 70 million euros slashed from that month's revenues.

The carrier said the effect had largely worn off by year-end but put the overall impact at some 120 million euros.

Chairman and CEO Alexandre de Juniac had said in January he expected a return to the black due to restructuring measures and the "favourable environment" of lower fuel prices.

But the carrier said it remained cautious on this year owing to economic uncertainty.

"We shall not pare back our ambition to improve our competitive position while economic and geopolitical uncertainties remain high," said De Juniac.

The chairman said management had to be vigilant as the group continues to "negotiate agreements with our staff that target an improvement in our competitive position" vis-a-vis European rivals.

Last year saw the carrier engaged in at times bitter talks with staff as it looks to push through its "Perform 2020" growth plan.

In October, six workers were arrested after staff ripped off executives' shirts in an angry protest over 2,900 planned redundancies.

Management last month unveiled a fresh 2017-2020 growth plan comprising 1,600 voluntary departures by the end of next year, according to union sources.

Air France is facing tough competition from Gulf-based competitors for long-haul business and from low-cost rivals for short-haul market share.

© 2016 AFP

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