Twice as good?

2 Sep 2004 By Fiona Maharg-Bravo

That’s no small feat, considering the oil price. But it is probably more to do with KLM s own cost cutting efforts than any real synergies. With average fares still falling and more capacity coming through, it is hard to see shares continuing to outshine peers.

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Air FranceKLM said net profit doubled in the quarter to June 30 from a proforma E46m last year to E95m this year. This is the first time the recently merged FrancoDutch airline reported consolidated results, which included two months of KLM and three months of Air France.

Revenues grew 12% to E4.4bn relative to the same period a year ago, when traffic plummeted due to the Sars epidemic and the war in Iraq. Operating costs grew more slowly. KLM's revenues, which contribute a third of the group's overall sales, grew faster at 14%, while sales at Air France were up 12%. There was no breakdown of operating costs by airline.

The airline said an improving business climate contributed to a 17% increase in traffic on the back of a 13% expansion in the airline's capacity. But yields, or average fares, fell 4% in the quarter.

Air FranceKLM confirmed it was expecting a substantial rise in operating profit before aircraft disposals this fiscal year, assuming the oil price averages $40 the rest of this year.

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