Air France-KLM returns to profit in first quarter on recovery in passenger and cargo traffic

Air France-KLM returns to profit

PARIS — Air France-KLM said Tuesday that it returned to profit in the three months up to June thanks to a euro1.03 billion ($1.34 billion) gain from the listing of travel reservations company Amadeus, in which it has a stake.

Europe’s biggest airline group reported a net profit in its fiscal first quarter of euro736 million compared with a net loss of euro426 million in the same period a year ago. The result was above analysts’ expectations.

Revenue grew by 10.7 percent to euro5.72 billion after a “strong recovery in both passenger and cargo” traffic, the airline group said.

But without the gain from reducing its stake in Amadeus from 22 percent to 15 percent, Air France-KLM would have stayed in the red.

The airline group reported an operating loss of euro132 million in the quarter, compared to a loss of euro496 million a year earlier.

But it said it would have broken even had European airspace not been closed in April following a volcanic eruption in Iceland. It estimates the cost of the five day closure due to the ash cloud over Europe at euro158 million.

Looking ahead, Air France-KLM said it remains careful, despite healthy summer bookings.

“Forward bookings for the second quarter are solid, but uncertainty surrounding the economic environment and the fuel price leads us to remain prudent for the second half of the year,” it said in a statement.

Excluding the impact of the airspace shutdown, the airline group said it expects to break even at the operating level in its fiscal full year 2010-2011.

Shares on Tuesday closed down 0.14 percent at euro10.95.

The company, which in 2009 reported its biggest loss in more than 15 years, will hold a teleconference with financial analysts on Wednesday

Airlines, whose business goes up and down with the economy, were hurt during the recession but analysts say things are looking up.

The International Air Transport Association has forecast that global industry profits will reach $2.5 billion this year, an upturn from the huge $9.4 billion loss in 2009.

At last week’s Farnborough International Airshow, which analysts use to take the pulse of the industry’s health, a slew or orders inspired hopes that the industry is on the mend.