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AK/KLM Posts An Operating Loss Of 46 M€ For 4th Qu  
User currently offlineGisors From France, joined Apr 2008, 46 posts, RR: 0
Posted (8 years 1 week 2 days 6 hours ago) and read 4253 times:

Air France-KLM warned on Thursday that operating profit would fall by about a third this year because of fuel costs, and its shares slumped for a three-day loss of about 16 percent.

The airline reported a sharp rise in operating profit for the last full year. But it also warned that fuel costs would set it back sharply this year, even though it asserted it was among the world's airlines best placed to cope.

And it said that if fuel prices continued on current trends, they would trigger a restructuring of the airline industry.

Operating profits in the year to March 31 were 1.405 billion euros, up 13.3 percent on 2006-2007, on sales of 24.1 billion euros, despite a fourth-quarter operating loss of 46 million euros.

"The current year is set to be challenging, with the oil price and global economy creating significant uncertainty," chairman Jean-Cyril Spinetta told the Paris-based air carrier's board of directors, a company statement said. But thanks to "strategic advantages", efficient fuel hedging, rigourous cost control and ongoing post-merger synergies, Air France-KLM will remain "comfortably in profit," he said.

"Under these conditions, and based on an oil price of 120 dollars per barrel, our objective is of an operating income in the region of one billion euros." (1.58 billion dollars)

Air France-KLM said it was strongly placed because it had a 10-year-old strategy of hedging against rises in the cost of fuel. Finance director Philippe Calavia told journalists before a press conference: "Our target is to be among the airline companies in the world which stand up best to the situation."

Calavia said that the airline had already covered 78 percent of its fuel requirements for 2008-2009 on the basis of an oil price of 70-80 dollars per barrel. Air France considers it is better placed than most of its competitors because of its hedging strategy and because it has a relatively young fleet of aircraft which use less fuel than older models.

The French carrier said it's comfortable with a decision last month to abandon takeover talks with Italian state-owned airline Alitalia SpA after failing to agree terms with unions. ''Alitalia is in a much more difficult position now than it was two months ago,'' Calavia said today. He predicted that the high oil price and slowing economy may drive some airlines out of business.

3 replies: All unread, jump to last
User currently offlineSlz396 From , joined Dec 1969, posts, RR:
Reply 1, posted (8 years 1 week 2 days 6 hours ago) and read 4174 times:

Quoting Gisors (Thread starter):
the airline had already covered 78 percent of its fuel requirements for 2008-2009 on the basis of an oil price of 70-80 dollars per barrel

So AF has 75% of its fuel hedged at 75 dollars a barrel... I'd say that is pretty well done indeed!

User currently offlineIcareflies From United States of America, joined Jul 2007, 65 posts, RR: 3
Reply 2, posted (8 years 1 week 2 days 3 hours ago) and read 3960 times:
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Here is the full release from AP:
Please note the loss includes a 530 Millions euros exceptional charges for possible cargo activity penalty.

Air France-KLM swings to loss in fourth quarter on sluggish economy, higher oil prices

PARIS (AP) -- 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 fiscal fourth quarter.
Europe's largest airline said in a statement that it lost 542 million euros ($853.81 million) in the three months ending March 31, compared with a profit of 44 million euros a year earlier.

CEO Jean-Cyril Spinetta said the group expects operating profit for the coming fiscal year to fall as skyrocketing fuel costs cloud the outlook for the industry.

Oil prices are setting new records nearly every day, and on Thursday hit an all-time high above $135 a barrel before falling back.

Shares fell 9.1 percent to 16.95 euros ($26.82) in Paris midday trade.

Petercam analyst Thijs Berkelder said investors are selling the stock because Air France-KLM's forecast is worse than expected. But he noted that the outlook is "much better than what most airlines can demonstrate."

"They can keep a profit while others will dive into losses," he said,

The Franco-Dutch group said it expects operating profit -- a measure of earnings from ongoing operations -- to fall to 1 billion euros ($1.58 billion) in the coming year from 1.4 billion euros ($2.21 billion) in its latest fiscal year.

In the quarter, Air France-KLM said it had an operating loss of 46 million euros ($72.46 million) after a profit of 9 million euros a year earlier.

For the full year, Air France-KLM reported a 16 percent drop in net profit to 748 million euros ($1,178.32 million) from 891 million euros.

Results were hurt by an exceptional charge of 530 million euros ($8,34.91 million) which the airline group took to cover possible penalties arising from an antitrust probe into airline cargo activities.

Spinetta said the soaring cost of fuel means the industry is in for a "profound transformation," predicting capacity reductions, the acceleration of mergers and the exit of some players from the market.

Spinetta pointed to the carrier's young fleet of fuel-efficient aircraft, fuel hedging that softens impact of record oil prices, and synergies from the merger of Air France and KLM.

"We have strong qualities to come out of this reinforced," he said at a Paris news conference.

ABN Amro analyst Andrew Lobbenberg said Air France-KLM stands to gain market share as weaker players fall out of the market.

"It's going to be ugly but they are going to come through it," he said.

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 fuel-related hike.

Airlines paying about 82 percent more for jet fuel than they did a year ago.

Air France-KLM said its yearly fuel bill rose 7.4 percent to 4.57 billion euros ($7.2 billion). In the coming fiscal year, Calavia said he expects the fuel bill to rise by an extra 1.2 billion euros ($1.89 billion).

Quarterly revenue rose 5.8 percent to 5.7 billion euros ($8.98 billion), and was up 4.5 percent to 24.1 billion euros ($37.96 billion) in the full year, the company said.

AF777-300ER and 9W737-900 - Love it! Love it
User currently offlineHardiwv From Brazil, joined Oct 2004, 8780 posts, RR: 46
Reply 3, posted (8 years 6 days 4 hours ago) and read 3622 times:

KL needs to do some catch up in its business model as the B77W has so far not delivered the returns expected because of its configuration lay-out with too many Y seats.


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