A1FlyBoy
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PARIS - Air France-KLM blamed higher fuel prices Thursday for its swing to a fourth-quarter loss, a year after the two carriers merged to form the world's largest airline, but said full-year profit rose on better-than-expected cost savings from the deal.
The company said it lost 6 million euros ($7.6 million) for the January-March period after a 42 million euros profit in the year-earlier fourth quarter — despite a 5.4 percent increase in revenue to 4.63 billion euros ($5.84 billion) from 4.39 billion euros.
Effective hedging policies took the sting out of a 50 percent rise in oil prices, Air France-KLM said, limiting the increase in its fuel costs to 22 percent, while merger-related savings topped 115 million euros ($145 million) for the year — well above the initial forecast of 65 million euros ($82 million).
"The impact of these synergies, together with the relentless pursuit of the cost control programs implemented at both companies, have enabled us to generate a strong rise in our results, in spite of the sharp rise in oil prices during the second half of the year," Air France-KLM Chairman Jean-Cyril Spinetta said.
Full-year profit rose 20 percent to 351 million euros ($443 million) from 292 million euros a year earlier, while revenue rose 7.3 percent to 19.08 billion euros ($24.1 billion) from 17.8 billion euros.
The company also signaled an acceleration of its fleet renewal plans, beginning with an order for five Boeing 777-200 cargo planes for 2008 delivery and three more options, to replace aging 747s.
Spinetta said Thursday that high fuel prices and a weaker dollar — the currency in which airliners are priced — had combined to make investment in new, more fuel-efficient aircraft "much more attractive."
Some analysts had criticized the original Air France-KLM merger deal — which preserves the separate Air France and KLM brands for passenger flights and services — for being too "soft."
"In this so-called soft merger there are things which are going faster than in many mergers that describe themselves as hard," Spinetta said. He cited the approval already obtained from unions at both carriers for work to begin on new, common software platforms that will yield more savings.
Vice-Chairman Leo van Wijk said investors can expect many more savings in areas like information technology, purchasing and maintenance as old contracts expire and can be renewed on better, consolidated terms. "We've only skimmed the top of it," Van Wijk said.
Despite a 165 million euros ($208 million) savings in further synergies forecast for 2005-6, Air France-KLM is predicting that its operating profit before aircraft disposals will be comparable to the 489 million euros ($617 million) posted for 2004-5.
Excluding an 800 million euros ($1.01 billion) one-time gain from the sale of a stake in booking system Amadeus, income is also expected to remain flat, Spinetta said.
Despite recent fuel surcharges on tickets, passenger traffic rose 7.1 percent over the year, Air France-KLM said. The company is planning to increase passenger capacity by 5 percent a year.
Air France's order for 10 Airbus A380s is part of the planned capacity increases — but a possible delay in the superjumbo program announced by Airbus has cast doubt on the timing of Air France's delivery.
Airbus has said its deliveries to Singapore Airlines, the launch customer, could take place in the second half of next year instead of the first quarter, as originally planned.
Spinetta said Thursday that Air France has a "fixed, contractual rendezvous with Airbus" for delivery in time to begin A380 flights to Montreal and New York City in early 2007.
But he declined to say whether penalties were in place for late delivery.
"I'm waiting for Airbus to tell us exactly where they're at," he said.
Airbus spokesman David Velupillai refused to comment on delivery schedules.
Air France-KLM said its board will pay a 15 euro cents (19 cents) per share dividend at the next shareholder meeting, up from 5 euro cents (6 cents) per share last fiscal year.
Shares rose 0.7 percent to close at 13.09 euros ($16.55) in Paris trading on Thursday.
The company said it lost 6 million euros ($7.6 million) for the January-March period after a 42 million euros profit in the year-earlier fourth quarter — despite a 5.4 percent increase in revenue to 4.63 billion euros ($5.84 billion) from 4.39 billion euros.
Effective hedging policies took the sting out of a 50 percent rise in oil prices, Air France-KLM said, limiting the increase in its fuel costs to 22 percent, while merger-related savings topped 115 million euros ($145 million) for the year — well above the initial forecast of 65 million euros ($82 million).
"The impact of these synergies, together with the relentless pursuit of the cost control programs implemented at both companies, have enabled us to generate a strong rise in our results, in spite of the sharp rise in oil prices during the second half of the year," Air France-KLM Chairman Jean-Cyril Spinetta said.
Full-year profit rose 20 percent to 351 million euros ($443 million) from 292 million euros a year earlier, while revenue rose 7.3 percent to 19.08 billion euros ($24.1 billion) from 17.8 billion euros.
The company also signaled an acceleration of its fleet renewal plans, beginning with an order for five Boeing 777-200 cargo planes for 2008 delivery and three more options, to replace aging 747s.
Spinetta said Thursday that high fuel prices and a weaker dollar — the currency in which airliners are priced — had combined to make investment in new, more fuel-efficient aircraft "much more attractive."
Some analysts had criticized the original Air France-KLM merger deal — which preserves the separate Air France and KLM brands for passenger flights and services — for being too "soft."
"In this so-called soft merger there are things which are going faster than in many mergers that describe themselves as hard," Spinetta said. He cited the approval already obtained from unions at both carriers for work to begin on new, common software platforms that will yield more savings.
Vice-Chairman Leo van Wijk said investors can expect many more savings in areas like information technology, purchasing and maintenance as old contracts expire and can be renewed on better, consolidated terms. "We've only skimmed the top of it," Van Wijk said.
Despite a 165 million euros ($208 million) savings in further synergies forecast for 2005-6, Air France-KLM is predicting that its operating profit before aircraft disposals will be comparable to the 489 million euros ($617 million) posted for 2004-5.
Excluding an 800 million euros ($1.01 billion) one-time gain from the sale of a stake in booking system Amadeus, income is also expected to remain flat, Spinetta said.
Despite recent fuel surcharges on tickets, passenger traffic rose 7.1 percent over the year, Air France-KLM said. The company is planning to increase passenger capacity by 5 percent a year.
Air France's order for 10 Airbus A380s is part of the planned capacity increases — but a possible delay in the superjumbo program announced by Airbus has cast doubt on the timing of Air France's delivery.
Airbus has said its deliveries to Singapore Airlines, the launch customer, could take place in the second half of next year instead of the first quarter, as originally planned.
Spinetta said Thursday that Air France has a "fixed, contractual rendezvous with Airbus" for delivery in time to begin A380 flights to Montreal and New York City in early 2007.
But he declined to say whether penalties were in place for late delivery.
"I'm waiting for Airbus to tell us exactly where they're at," he said.
Airbus spokesman David Velupillai refused to comment on delivery schedules.
Air France-KLM said its board will pay a 15 euro cents (19 cents) per share dividend at the next shareholder meeting, up from 5 euro cents (6 cents) per share last fiscal year.
Shares rose 0.7 percent to close at 13.09 euros ($16.55) in Paris trading on Thursday.
