By Elviira Luoma
(Reuters) -Air France-KLM on Thursday reported a bigger-than-expected drop in its quarterly working consequence and warned that this 12 months’s prices could be greater than beforehand projected.
The French-Dutch airline group’s shares slumped 11% and can see their greatest each day drop in over two years if the losses persist.
It expects its unit price – the common price of flying an plane seat one mile – to develop by round 3% in 2024, as a substitute of the beforehand forecast 2%, after it rose 3.4% within the third quarter and with worsened expectations for the fourth.
“This is mainly related to higher staff and maintenance cost at KLM and lower capacity planned,” Bernstein analysts mentioned in a observe.
The group’s Dutch arm in October mentioned it will reduce prices and postpone investments to elevate earnings, because the business faces rising tools prices, employees shortages and better airport charges.
“At KLM, persistent cost challenges spiked higher than anticipated, putting pressure on parts of its business model and reinforcing the need for more concrete structural improvements,” CEO Benjamin Smith mentioned in an announcement.
Amsterdam’s Schiphol airport will enhance its charges for airways by 41% from April 2025, which KLM mentioned would result in an working revenue impression of 65-110 million euros subsequent 12 months.
Air France-KLM additionally mentioned that France’s proposed hike of the solidarity tax on flight tickets would hit its working consequence by 90-170 million euros and have an effect on its competitiveness in 2025.
Its working revenue fell by 162 million euros to 1.18 billion euros ($1.27 billion) within the third quarter, beneath a consensus of 1.24 billion, hit by greater prices and the Paris Olympics which brought on worldwide vacationers to keep away from the town and residents in France to postpone their holidays.
Quarterly income nonetheless rose by 3.7% to eight.98 billion euros, pushed by elevated capability and robust underlying demand.
Whereas demand has remained secure, upkeep prices, opposed climate, air visitors management points and disruption within the Center East have continued to weigh on airways.
($1 = 0.9315 euros)
