Air France-KLM Q1 earnings down 59 per cent

Paris: Europe's largest airline, Air France-KLM, said Tuesday higher fuel costs had resulted in a deep cut in first quarter earnings. It said net profit for Q1 (April-June) was euro168 million ($262 million), down 59 per cent from a year earlier, with fuel costs up 24 per cent.

The carrier said it would expand a cost cutting plan that it has already put into motion.

It said it carried 19.7 million passengers in the first quarter, up 2.2 per cent from a year earlier and sales were up  5.8 per cent to euro6.29 billion ($9.79 billion).

AF-KLM said its business passenger traffic growth was "dynamic" and that its cargo operations continued to be profitable. It also confirmed its May forecast for a decline in operating profit in the current fiscal year of around 30 per cent, to euro1 billion ($1.56 billion).

It also forecast its fuel bill would rise to euro5.86 billion ($9.12 billion) this year, up 28 per cent from last year. It also confirmed its forecast for a 2 per cent increase in capacity for the winter 2008 and summer 2009 seasons.

During the first quarter, AF-KLM managed savings of euro114 million ($177 million), the company said. It also said it would seek to make additional savings of euro190 million ($296 million) on top of the euro430 million ($669 million) already planned for.

This would take total planned savings for the year to euro620 million ($965 million).

Through a statement it said the deeper cost cuts were in response to "the new economic environment." It did not clarify where the savings would be effected.