AIRLINE NEWS
Friday, May 23, 2008
Air France feels pinch as oil prices hit home
Air France-KLM said Thursday it expects the coming year to be "challenging" amid sharply higher oil prices and a sluggish global economy which contributed to a net loss in its fourth quarter.
Europe's largest airline said in a statement it lost $853.81 million in the three months ending March 31.
CEO Jean-Cyril Spinetta said the group expected operating profit for the coming fiscal year to fall as skyrocketing fuel costs clouded the outlook for the industry.
Oil prices were setting new records nearly every day, and on Thursday hit a record above $135 a barrel before falling back.
For the full year, Air France-KLM reported a 16 percent drop in net profit to $1.2 billion.
Shares fell 10.2 percent to $26.37 in Paris morning trade. ABN Amro said the full year net profit was "well below" its forecasts.
The airline group booked an exceptional charge in the quarter of $834 million to cover possible penalties arising from an anti-trust probe into airline cargo activities.
Air France-KLM said it had an operating loss -- a measure of earnings from ongoing operations -- of $72.46 million in the quarter. In the full year, operating profit rose 13.3 percent to $2.21 billion.
The Franco-Dutch group said was targeting an operating profit of $1.58 billion in the coming year.
Spinetta said the soaring cost of fuel meant the industry was in for a "profound transformation," predicting capacity reductions, the acceleration of mergers and the exit of some players from the market.
Given its young fleet of fuel-efficient aircraft, a hedging policy which softens the impact of higher oil prices, and synergies from the merger of Air France and KLM, he said the airline group was well-placed to weather the storm.
"We have strong qualities to come out of this reinforced," he said at a Paris news conference.
To compensate for higher oil prices, some airlines raised ticket prices again last week. Air France, which operates separately from its Dutch partner KLM, announced its 17th oil price linked hike, bringing the total fuel surcharge for passengers to $156 for a one way long haul flight.
Airlines paying about 82 percent more for jet fuel than they did a year ago have preferred to cope by raising fares and charging for extra bags and other amenities.
American Airlines on Wednesday announced drastic measures to cope with record high fuel prices including layoffs.
Air France-KLM recently broke off merger talks with struggling Italian airline Alitalia, and CFO Philippe Calavia said the Italian carrier's situation "is much more difficult today than it was two months ago."
Air France-KLM said its yearly fuel bill rose 7.4 percent to $7.2 billion. In the coming fiscal year, Calavia said he expected the fuel bill to rise by an extra $1.89 billion.
Source: cnn.com
Europe's largest airline said in a statement it lost $853.81 million in the three months ending March 31.
CEO Jean-Cyril Spinetta said the group expected operating profit for the coming fiscal year to fall as skyrocketing fuel costs clouded the outlook for the industry.
Oil prices were setting new records nearly every day, and on Thursday hit a record above $135 a barrel before falling back.
For the full year, Air France-KLM reported a 16 percent drop in net profit to $1.2 billion.
Shares fell 10.2 percent to $26.37 in Paris morning trade. ABN Amro said the full year net profit was "well below" its forecasts.
The airline group booked an exceptional charge in the quarter of $834 million to cover possible penalties arising from an anti-trust probe into airline cargo activities.
Air France-KLM said it had an operating loss -- a measure of earnings from ongoing operations -- of $72.46 million in the quarter. In the full year, operating profit rose 13.3 percent to $2.21 billion.
The Franco-Dutch group said was targeting an operating profit of $1.58 billion in the coming year.
Spinetta said the soaring cost of fuel meant the industry was in for a "profound transformation," predicting capacity reductions, the acceleration of mergers and the exit of some players from the market.
Given its young fleet of fuel-efficient aircraft, a hedging policy which softens the impact of higher oil prices, and synergies from the merger of Air France and KLM, he said the airline group was well-placed to weather the storm.
"We have strong qualities to come out of this reinforced," he said at a Paris news conference.
To compensate for higher oil prices, some airlines raised ticket prices again last week. Air France, which operates separately from its Dutch partner KLM, announced its 17th oil price linked hike, bringing the total fuel surcharge for passengers to $156 for a one way long haul flight.
Airlines paying about 82 percent more for jet fuel than they did a year ago have preferred to cope by raising fares and charging for extra bags and other amenities.
American Airlines on Wednesday announced drastic measures to cope with record high fuel prices including layoffs.
Air France-KLM recently broke off merger talks with struggling Italian airline Alitalia, and CFO Philippe Calavia said the Italian carrier's situation "is much more difficult today than it was two months ago."
Air France-KLM said its yearly fuel bill rose 7.4 percent to $7.2 billion. In the coming fiscal year, Calavia said he expected the fuel bill to rise by an extra $1.89 billion.
Source: cnn.com
Labels: Air France-KLM, fuel
