Air France KLM Profit Declines on Fuel and Hedging by 96 percent

Air France KLM reported last week that they have seen a 96% decline in profit during the 2^nd quarter as the price of oil is falling, reducing the value of their fuel hedges. The airline has issued a less positive outlook on earnings, blaming the slowdown of the economy.

The carrier’s net income from July until the end of September dropped from €736 million earlier in the year to €28 million, according to the airline last Thursday. Their earnings before tax and interest were €405 million, which is down 44% in comparison to the €725 million of last year. Also their income from operations dropped to €639 million, which is also 44% less than last year’s €1.14 billion. Figures for the 2^nd quarter included a charge of €373 million against hedging instruments worth.

On October 24^th, the company talked of an operating profit of €1 billion, warning that achieving that goal would prove to be difficult. Then recently this largest airline in Europe said that they will be totally profitable for this fiscal year.

Jean-Cyril Spinetta, the Chief Executive Officer of Air France KLM, said in a statement that the economy’s deterioration has increased since the summer. The company also sated that passenger traffic has held up rather well, increasing by 1.7%, which kept their planes flying at 83% full.

Pierre-Henri Gourgeon, the Chief Operating Officer of the company and who is to be the Chief Executive come January, said that their first half was good during the difficult economic environment, and they resisted it better than their competitors, because they have a two hub powerful system. He also added that their operating margin was superior to that of British Airways and Lufthansa.

Get more information about the airline at: www.airfranceklm-finance.com