Higher costs depress Air France-KLM profit

Airline company Air France-KLM closed the important third quarter of the year with a lower profit. Higher personnel and fuel costs and expenses for phasing out the Airbus A380, among other things, depressed the result. The company did welcome more travelers than a year earlier.

The operating profit of the Dutch-French group fell by 165 million euros to 900 million euros. An amount of 366 million euros remained below the line, which was 420 million euros less compared to the third quarter of 2018.

The fuel costs of Air France-KLM increased by 135 million euros during the measurement period. In addition, the group reserved 100 million euros for the farewell of the superjumbo A380. Furthermore, wage expenditure increased by 5 percent to more than 2 billion euros. The company hired more staff to cope with the capacity expansion. The wages of employees also increased.

Financial director Frédéric Gagey also pointed out in an explanation the negative effect of the more expensive dollar. Furthermore, the disappearance of the bankrupt industry colleague Aigle Azur, who purchased certain services from Air France, caused a damper. All in all, he described the results as not surprising. He also pointed to the performance of Air France-KLM compared to that of industry peers such as Lufthansa and British Airways mother IAG.

At KLM, the operating result was 61 million euros lower to 512 million euros. Air France accounted for 383 million euros, which was 110 million euros less than a year earlier. One-off costs for the Aigle Azur issue and a supplementary payment to partner Delta Air Lines due to strikes cost the French branch 30 million euros.

Transavia accounted for an operating result of 173 million euros. That meant a decrease of 5 million euros. The Transavia capacity will grow by 6 percent to 8 percent this year, from an earlier forecast of 7 percent to 9 percent. There was also a volume decrease of 5.3 percent in the freight division. The total passenger flow of Air France-KLM increased by 2.1 percent to 29.1 million passengers. The total turnover amounted to 7.7 billion euros.

For the entire year, Air France-KLM is counting on a fuel bill that is 600 million euros higher to 5.5 billion euros. Earlier there was talk of a fuel bill growth of 550 million euros. The group also wants to reduce costs. Excluding currency effects and fuel costs, the group expects a decrease to 1 percent. The company will present its strategy on 5 November.

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