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            october 15, 2019

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Air France-KLM quarterly profit increases 21-fold


Air France-KLM posted a 21-fold increase in third quarter year-on-year net profit to EUR306 million (US$397 million), drawn on revenues of EUR7.2 billion, the Shipping Gazette informs. 
But cargo flow deteriorated over the quarter, impacted by the economic slowdown and the situation of overcapacity in the industry. Traffic fell by 6.6 per cent for capacity, down by 3.7 per cent.
Unit revenue per available tonne kilometre rose 0.7 per cent on the back of a positive currency effect of 6.7 per cent. Cargo revenues stood at EUR 758 million (minus 1.9 per cent) while the operating result was minus EUR 67 million.
Quarterly results were termed "satisfactory" with improved profit on the back of increase passenger traffic and favourable exchange rates which helped offset a decline in the airline's cargo business.
A limited capacity increase in the passenger industry led to an improvement in unit revenues in the third quarter, which was additionally helped by a positive foreign exchange effect due to the depreciation of the euro in comparison to other currencies.
Air France's cost reduction plan, Transform 2015, has started to have a "significant impact on costs", according to an airline statement. Operating costs totalled EUR6.68 billion, up 4.5 per cent (+ 0.7 per cent ex-fuel). On a comparable currency basis they fell 1.1 per cent, reflecting the strict cost control measures implemented in the context of Transform 2015.
The fuel bill increased by 14.8 per cent, or EUR254 million, to EUR 1.97 billion under the effect of a decline in volume of two per cent, a negative currency effect of 15 per cent and a rise in the fuel price after hedging of two per cent.
Staff costs (excluding temporary staff) amounted to EUR1.88 billion. The measures taken in the context of Transform 2015 took effect, limiting the rise to 1.2 per cent in spite of an additional pension charge at KLM of EUR18 million.

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