Air France profits nosedive but carrier remains optimistic

Air France-KLM’s profits dropped significantly during the first quarter of the current calendar year, primarily due to soaring fuel costs, as well as a weak economy and consequent stagnation in the air travel industry. According to the most recent estimates, Air France-KLM’s profits actually dropped by around 59 percent compared to the same period last year. Despite this decline, however, the Franco-Dutch airline still managed to turn a relatively impressive profit of €168 million, which was actually better than what many analysts had originally expected. Most industry experts assumed that Air France would make around €145 million.

Air France is still optimistic that it will be able to ensure that its annual earnings for 2008 reach €1 billion. Yet if the airline needs some consolation for having sustained such a drastic decline in profits, it should turn towards Iberia, where a 72 percent rate of decline far surpassed that of Air France. Iberia, however, is getting ready to tackle its own problems by merging with British Airways. Air France officials welcomed the move, noting that there are too many players in the European airline industry as it is, and that mergers will help the entire sector.

There may also be some good news on the way for Air France-KLM, the world’s largest carrier in terms of its revenue, as well as for other airlines. The price of oil has been falling for the past several days, and closed at $118 per barrel earlier this week. The further the price of oil falls, the easier it will become for carriers to turn a profit, especially after various cutbacks initiated earlier this year.

www.airfrance.com