By David Pearson Of DOW JONES NEWSWIRES PARIS -(Dow Jones)- Air France KLM (3112.FR) reported Thursday that its restated net profit for the three months ended Sept. 30 fell 49% to a restated EUR244 million, reflecting the impact of soaring fuel costs, slowing traffic and the weak U.S. dollar.
The second-quarter figure took into account a negative adjustment of EUR373 million for the "time" value of hedging instruments during the period, something that the airline hasn't done before.
Restated to take this into account as well as other non-recurring items, notably a EUR212 million capital gain in the year-ago quarter, net profit in the three months to Sept. 30, 2008 came in at EUR28 million, against EUR736 million.
Chief Operating Officer Pierre-Henri Gourgeon told a group of journalists that the international accounting rules that force airlines to account for potential losses from hedging positions on a mark-to-market basis are "inconsistent" and "incoherent."
Air France KLM's earnings for the second quarter of its financial year ending March 31, 2009, reflect an extremely tough business environment as it and other airlines battled to limit the impact of soaring fuel prices and sagging demand.
The second-quarter restated net profit came in below an average estimate of EUR272 million calculated by the airline from a survey of 16 analysts.
The airline reaffirmed guidance it gave one month ago that it expects operating profit for the full year to be "clearly in profit."
Air France KLM said its second-quarter revenue rose by 3.2% to EUR6.69 billion, while operating profit fell 44% to EUR405 million, giving an operating margin of 6.8%, outstripping the airline's main European competitors that have reported margins of between 3% and 4%.
Air France KLM is the leading European airline by market share with 13.5%, compared with 9% for Deutsche Lufthansa AG (LHA.XE) and 8% for British Airways PLC (BAY.LN).
"The second-quarter result is good, in a difficult business context," Gourgeon said, noting that the airline's fuel bill had swelled by EUR700 million in the first half to about EUR3 billion despite being partly offset by its fuel hedging program.
Gourgeon said Air France KLM plans to boost its cost-savings program for the current financial year by EUR260 million, and is projecting additional savings totaling EUR1.16 billion through 2012. He said that in view of the outlook for slow or negative traffic growth, Air France KLM plans to reduce spending on its aircraft fleet by EUR1.6 billion over the next three years.
Air France KLM's passenger traffic held up well in the period, rising 1.7% while capacity rose 3.6%. Cargo traffic fell by 6.8%. The sharp slowing of economic activity is starting to hurt airline traffic, however.
The airline warned analysts at a presentation on Oct. 24 that it won't achieve its objective of achieving a EUR1 billion operating profit for the full year, though it predicted that it "will remain comfortably in profit as long as market conditions do not deteriorate any further."
Analysts hadn't expected the airline to revise that guidance given out one month ago.
Gourgeon said he estimates the cost of a four-day strike that forced the airline to cancel about half of its flights through Monday at between EUR40 million and EUR50 million, compared with the EUR100 million that it had projected last week, saying the strike was less disruptive than feared.
Air France KLM shares closed Wednesday at EUR10.05, up 0.9% on the day. The stock has fallen by 56% over the last 12 months.
Company Web site: www.airfranceklm-finance.com
-By David Pearson, Dow Jones Newswires; +331 4017 1740, david.pearson@dowjones.com
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(END) Dow Jones Newswires
November 20, 2008 02:53 ET (07:53 GMT)

Publié le 20 novembre 2008 Copyright © 2008 Dowjones