Air France KLM said on Tuesday its first-quarter net profit more than halved due to a spike in oil prices and an economic slowdown.
Air France-KLM, the world's biggest carrier by revenue, said on Tuesday first-quarter net profit fell 59 percent to EUR168 million euros (USD$262 million).
"The results really look good and the outlook has been confirmed. Beyond the results, the fall in the price of oil is supporting the whole sector," said Raymond James analyst Bruno de la Rochebrochart.
Air France-KLM confirmed that its first-quarter results were in line with its objective of achieving operating income in the order of EUR1 billion for the full year.
It said that despite the slowdown in global growth and the increase in fares designed to absorb some of the rise in oil prices, passenger traffic rose 3.7 percent and its load factor was 80.3 percent.
Premium traffic remained dynamic, underpinning unit revenues. There was a further recovery in profitability at the cargo division, with a significant increase in unit revenues.
Maintenance and the other activities also made a positive contribution to group results, it said.
The results come days after British Airways reported a collapse in first-quarter profit in what the airline called the worst-ever trading conditions.
Ryanair, Europe's largest low-cost carrier, posted an 85 percent fall in net profit at the end of July and warned of a full-year loss if oil prices stayed high and fares fell.
Oil is currently below USD$120 a barrel, down from a record of USD$147 in mid-July. The fuel prices have worried airline investors, knocking 32 percent off Air France-KLM's shares this year, giving it a market value of USD$7.6 billion.
Operating profit fell to EUR234 million from EUR415 million in the same period of 2007. First-quarter sales were up 5.8 percent at EUR6.29 billion.
The fuel bill amounted to EUR1.36 billion against EUR1.09 billion at June 30, 2007, a rise of EUR266 million or 24.3 percent. This was due to a 3 percent rise in volume, an increase in jet fuel costs after hedging of 40 percent and after a positive currency impact of 14 percent.
Air France-KLM's already reported passenger traffic rose 2.6 percent in June. The group said that "in response to the new economic environment", it would re-enforce its Challenge 10 plan with an additional EUR190 million in cost-savings.
This would take the total for the financial year 2008-09 to EUR620 million. Air France-KLM will adjust its capacity plans, with a rise of around 2 percent for the Winter 2008 and Summer 2009 seasons.
Operating cash flow stood at EUR1.01 billion at end-June against EUR769 million a year ago and available cash flow stood at EUR532 million.
