Air France-KLM warns on profits as air travel numbers fall
Saturday 25 October 2008
Air France-KLM, Europe's largest airline, issued a profits warning yesterday against a backdrop of figuresshowing the first monthly decline in worldwide air travel since 2003.
The French-Dutch group said it will find it "very difficult" to meet its full-year profit target of €1bn (£802m) in light of current economic conditions. The company is also to limit increases in capacity for both this winter and next summer to between 1 per cent and2 per cent. It has put in place a cost-saving plan and is slimming down itsinvestment programme.
Although Air France-KLM maintains that it will still make a full-year profit if conditions do not deteriorate further, this stability is by no means guaranteed. The International Air Transport Association (Iata) figures for airline passenger traffic show a 2.9 per cent year-on-year drop for September, the first such fall in five years, as both tourists and lucrative business travellers rein in their travel. Cargo traffic was down 7.7 per cent compared with the same month in 2007.
Giovanni Bisignani, the director general of Iata, said: "The deterioration in traffic is alarmingly fast-paced and widespread. We have not seen such a decline in passenger traffic since [the health scare over] SARS in 2003."
The rapidly falling oil price, which had been increasing carriers' jet fuel costs, is not offsetting the problems caused by recessionary worries across the world, Mr Bisignani said. "At this rate, [the airline industry's] losses may be even deeper than our forecast $5.2bn (£3.3bn) for this year."
Air France-KLM shares closed down 3.29 per cent in Paris. In London, British Airways (BA) was off 4.69 per cent.
It has already been a difficult year for airlines. More than two dozen companies have gone bankrupt so far this year, including Zoom, Silverjet and Oasis. In August, Willie Walsh, the BA chief executive, warned that theindustry was facing its "worst ever" trading conditions, as BA reported an 88 per cent slump in profits in the first quarter of its financial year.
Yesterday's news from Brussels that the European Council has signed off on a plan to include the aviation sector in its carbon emissions trading scheme (ETS) did nothing to improve the mood. Whilst environmentalists applauded the decision, Iata accused Brussels of "acting in a bubble – even in the middle of a global economic climate."
Mr Bisignani said: "Crisis is not the time for rubber stamps, but that is exactly what the Council of Justice and Home Affairs Ministers used today – without a word of debate – to seal into law the €3.5bn cost of bringing airlines into the European ETS."
- 1 If you're not already angry about the refugee crisis, here's a history lesson to remind you why you really should be
- 2 David De Gea: Manchester United goalkeeper's £29m move to Real Madrid off - because paperwork 'not done in time'
- 3 More than 11,000 Icelanders offer to house Syrian refugees to help European crisis
- 4 Pansexual: What is it - and when did the term gain popularity?
- 5 New Apple TV release date and price: streaming box and games console will launch in October
Bono's group has made more money from Facebook investment than from all his music
Miley Cyrus calls out hypocrisy of women’s nipples being taboo
Auschwitz museum defends mist showers installed during heat wave after visitor complains they are reminiscent of gas chambers
Nazi 'gold train': Fire engulfs suspected location of vehicle in Poland
A Chinese journalist has appeared on state television 'confessing' to causing the stock market chaos
Climate change: 2015 will be the hottest year on record 'by a mile', experts say
Jeremy Corbyn calls Osama bin Laden's killing a 'tragedy' - but was it taken out of context?
Tony Blair attacks Jeremy Corbyn's 'Alice In Wonderland' politics
Theresa May says migrants should be banned from entering the UK unless they have jobs lined up
Iain Duncan Smith 'should resign over disability benefit death figures', says Jeremy Corbyn
UN investigating British Government over human rights abuses caused by IDS welfare reforms
iJobs Money & Business
£20000 - £25000 per annum: Recruitment Genius: We are a vibrant and establishe...
£15000 - £20000 per annum: Recruitment Genius: An experienced Repayments Advis...
£25000 - £30000 per annum: Recruitment Genius: This leading provider of financ...
£20000 - £25000 per annum + competitive: SThree: Are you looking to take your ...