Air France-KLM Stock Jumps as Profit Beats Forecasts Despite Fuel Costs

what happened

Air France-KLM shares climbed more than 12% on Thursday after the group reported third-quarter results, according to Dow Jones Newswires. Net profit reached 908 million euros, up from 730 million a year earlier. Adjusted operating profit rose to 1.35 billion euros, above the 1.08 billion euros analysts had expected. Revenue of 9.92 billion euros fell slightly short of the 9.95 billion euro consensus.

The company now expects fuel spending of 9.2 billion dollars this year, compared with the 8.9 billion dollar forecast it shared in July. It has hedged 62% of fuel consumption for the fourth quarter and 54% for all of next year. Slower capacity growth, now around 2%, and cuts to discretionary spending are helping to keep costs under control.

why it matters

Higher fuel prices since the U.S. and Israeli strikes on Iran in late February remain the main risk for airlines. The result suggests that hedging and higher ticket surcharges are working for now, but protecting profits over the long term will be harder if oil prices stay elevated for longer than expected.

market impact

Air France-KLM stock: results above forecasts support the airline's shares

• ▲Air France-KLM shares pressure up — quarterly profit and cost control came in better than market expectations

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