Air France KLM reports €736 million first-quarter profit

Photo: Courtesy, Michael Lindner, Air France.

Boosted by a €1.03 billion capital gain from the sale of its 23.1% stake in Amadeus, Air France KLM Group posted a net profit of €736 million ($953 million) for its fiscal first quarter ended June 30, reversed from a €426 million deficit in the year-ago period.

In addition to the gain from the Amadeus IPO (ATW Daily News, April 15), the company cited a “strong recovery” in both passenger and cargo traffic, with a “strong rise in unit revenues, especially in cargo.”

Revenue for the three months rose 10.7% year-over-year to €5.72 billion. AF KLM said that without the impact of the airspace closures, revenue would have lifted 15.9%. Operating costs increased 3.3% owing in large part to a 26.8% increase in fuel costs to €1.44 billion. Excluding fuel, costs declined 2.6%. Operating loss narrowed to €132 million from €496 million a year ago.

The group said the closure of European airspace in April “masked” the recovery in passenger traffic. Quarterly traffic declined 2.3% to 49.28 billion RPKs, but was up over 4% in both May and June versus last year. Capacity was reduced 4.9%, leading to a 2.2 point gain in load factor to 81.5%.

Unit revenue recovered to levels “close to those of 2007-08," it said. RASK was up 14.8% to €0.0689 and yield rose 11.8% to €0.0845.

Passenger revenue heightened 8.8% to €4.37 billion. The operating loss of the passenger business narrowed to €142 million from €338 million in the year-ago period. Without the impact of the airspace closure, it would have been at breakeven, AF KLM said.

It noted that forward bookings for the fiscal second quarter are “solid” but cautioned that uncertainty surrounding the economic environment and fuel prices “leads us to remain prudent” for the second half of the year. “Nevertheless, in view of the positive indications from the medium-haul transformation and the quicker than expected turnaround of the cargo business, our objective for full year 2010-11 is of operating breakeven, excluding the impact of the airspace closure in April.” It reported a €1.28 billion operating loss for its fiscal year ended March 31.