News
Air France KLM 3Q profit falls 39 per cent

Feb. 14, 2008, Paris –  Air France-KLM, the world's biggest airline by revenue,
said Thursday its profit fell 39 per cent in its third quarter due
to higher oil prices, strikes and special items, but said its
operating profit rose as it attracted more passengers.

In a statement, the airline said it earned 139 million euros
(US$203 million) in the three months ending Dec. 31, down from 229
million euros a year earlier.

That was after a tax bill of 63 million euros ($92 million) and
financial charges of 85 million euros ($123.98 million) linked to a
negative impact from the reevaluation of derivatives.

Operating profit _ a measure of earnings from ongoing operations
_ rose 23 per cent in the quarter as the Franco-Dutch airline raised
prices and attracted more passengers. It reported operating income
of 311 million euros ($454 million), compared with 252 million euros
a year earlier.

Quarterly revenue grew 3.9 per cent to 5.98 billion euros ($8.72
billion), limited by unfavorable currency effects, the company said.

The airline said the rise in passenger traffic was held to 1.9
per cent because of strikes in October and December, and said prices
increased one per cent in the period.

Kepler Equities said the results were better than expected,
noting that Air France-KLM “is benefiting from its pricing power.''

Last month Air France-KLM raised its fuel surcharge by as much as
eight euros ($11.67) on a long-haul flight because of higher oil
prices. The fee on domestic flights rose by one euro ($1.46).

For the full year ending March 31, Air France-KLM confirmed its
margin forecast of a return on capital employed of seven per cent.
Chief executive Jean-Cyril Spinetta has said an Alitalia deal could
increase that to 8.5 per cent by 2010.

The airline is in exclusive talks to take over Italian
state-controlled airline Alitalia.

The talks come amid political upheaval in Italy following the
resignation of Romano Prodi's government, which picked Air
France-KLM in December for negotiations that may lead to a takeover.

Prodi said last week he would try to complete the sale of failing
national carrier Alitalia despite his government's collapse and
upcoming elections.

Analysts are also wary about the costs and difficulties of
turning around loss-making Alitalia.

For the first nine months of the fiscal year, net income rose to
1.29 billion euros ($1.88 billion) from 847 million euros a year
earlier _ an increase of 52 per cent.

Shares fell 2.6 per cent to 19 euros ($27.71) in midday Paris
trading. The stock has fallen 22 per cent since the beginning of the
year on concerns that an economic slowdown will impact the airline
industry and fears over its Alitalia ambitions.

THE ASSOCIATED PRESS