Shares in Air France-KLM climbed over 12% Thursday after the carrier surprised investors with higher operating profit in the third quarter (Q3) despite a soaring jet fuel bill.
Like other airlines, Air France-KLM has raised ticket prices to cope with the surge in fuel costs as the US-Israeli war on Iran keeps global energy costs high.
Operating profit in the July to September period, one of the busiest for airlines, increased 10% to €1.35 billion (US$1.5 billion), the company said, with passenger traffic up 1.8%.
Unit revenue per available seat kilometres (ASK), a key profitability measure for the industry, rose 6.6% to €9.70 cents.
Higher ticket prices helped cushion the blow from fuel costs, which were €436 million higher in the third quarter compared to the period last year.
“Strong unit revenues fully offset the impact of higher fuel prices amid the Middle East crisis,” the airline said.
For the full year it expects total fuel costs to hit €9.3 billion, up €2.3 billion from last year.
“This performance reflects the benefits of the strategic choices we have made in recent years, starting with Air France’s move upmarket,” group chief executive Benjamin Smith said in a statement.
The airline said it would also pursue “additional structural measures” to improve profitability at KLM, its Dutch unit whose margins have lagged behind Air France’s.
In a separate statement, KLM said the restructuring would include a further 15% cut in overall jobs, with around 5,000 posts “reorganised”.
It aims to eventually boost earnings by €1 billion a year.
Air France-KLM shares were up 12.5% at €12.69 on the Paris stock exchange.
