Friday 24 February 2017

Air France/KLM soars, despite €130m Paris terror cost

James Regan and Cyril Altmeyer

KLM president and chief executive Pieter Elbers, left, and Air France-KLM chairman and chief executive Alexandre de Juniac in Paris yesterday. Photo: AFP/Getty Images
KLM president and chief executive Pieter Elbers, left, and Air France-KLM chairman and chief executive Alexandre de Juniac in Paris yesterday. Photo: AFP/Getty Images

Franco-Dutch airline Air France-KLM beat forecasts with a return to profit last year, helped by a drop in the fuel bill and growth in passenger numbers, lifting its shares close to a nine-month high yesterday.

The carrier achieved an operating result of €816m, compared with a loss of €129m in 2014, it said in a statement. This beat analysts' average forecast of €544m in a Reuters poll.

The company cautioned that pressure on ticket prices from increased competition would eat into the benefits of cheaper fuel this year, though it maintained its medium-term financial targets. "The global context in 2016 remains highly uncertain regarding fuel prices, the continuation of the overcapacity situation on several markets, and the geopolitical and economic context in which we operate," the airline said.

"In consequence, the group expects the expected savings on the fuel bill to be significantly offset by unit revenue pressure and negative currency impacts."

Air France-KLM is cutting labour costs and restructuring its network to better compete with Gulf airlines and fast-growing European low-cost carriers.

Air France-KLM also said it lowered its net debt to €4.3bn at the end of December from €5.4bn a year earlier and pledged a "further significant reduction" this year.

Shares in the company were up 9.6pc yesterday to their highest level since May, making the stock the leading gainer on the broad French SBF 120 index.

The carrier said the fall in oil prices cut its 2015 fuel bill by 6.7pc to €6.18bn, including a 20pc decline in the fourth quarter. This could drop further to €4.5bn this year.

The airline added the impact on revenue from the November 13 Islamist attacks in Paris was estimated at €120m in the fourth quarter.

Three-month revenue nonetheless rose 2.2pc to €6.3bn. (Reuters)

Irish Independent

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