Arab Today, arab today lufthansa air franceklm shares soar on strong quarterly results
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Lufthansa, Air France-KLM shares soar on strong quarterly results

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Arab Today, arab today Lufthansa, Air France-KLM shares soar on strong quarterly results

Paris - AFP

Surprisingly strong results from European airlines Lufthansa and Air France-KLM boosted their share prices on Wednesday despite cautious outlooks for the rest of the year owing mainly to a weak business climate and uncertain fuel prices. Lufthansa, the biggest European airline group, reported a 30 percent jump in third quarter net profit to 642 million euros ($832 million), whereas analysts had braced for a plunge of up to 40 percent. Air France-KLM turned in a quarterly net profit of 308 million euros meanwhile, well above an average analyst forecast of 267 million compiled by Dow Jones Newswires. In the third quarter of 2011, Air France-KLM had recorded a net profit of just 14 million euros. \"Despite strong headwinds, we have managed to achieve a respectable profit,\" Lufthansa chief executive Christoph Franz noted, while Air France struck an even more sober tone, terming its results \"satisfactory\" in all spheres except its cargo unit. On the Frankfurt stock exchange, shares in Lufthansa gained 7.33 percent to close at 11.79 euros on a market that was down by 0.33 percent overall, as investors also welcomed a pledge by the airline to intensify cost-cutting measures. Air France-KLM shares ended the day 8.37 percent higher at 6.45 euros, while the Paris CAC 40 index had fallen by 0.87 percent. Both airlines took care to keep expectations for the full year within reason, with Franz highlighting the fact that Lufthansa faced \"unsettling times.\" From a current perspective, the operating profit for the financial year 2012 \"is only expected to be modest. The precise figure will depend on external factors, which remain volatile,\" he said. Underlying or operating profit at the group, which also owns Austrian Airlines and the carrier Swiss, rose by 6.2 percent in the quarter to 648 million euros on a 6.2-percent increase in sales to 8.312 billion euros. Looking at the nine months to September, Lufthansa\'s net profit jumped by 65 percent to 474 million euros, but operating profit was down 13 percent at 628 million euros, despite a 6.1-percent increase in sales to 22.8 billion euros. \"Ever-growing low-cost airlines and carriers from the Middle East are challenging us in our core business segment. Both the ongoing crisis in the euro area and the persistently high oil price had a distinct effect on business performance,\" Franz said. In addition, \"persistently intense price pressure, the air traffic tax and the costs of EU emissions trading certificates also impacted on earnings. We don\'t have the level of profitability we need,\" he concluded. With the business environment and market conditions set to stay challenging, Lufthansa was cautious about its full-year outlook and vowed to intensify its cost-cutting measures. In addition to a freeze in spending and efforts to bundle procurement and operations among low-cost subsidiaries, \"more changes are necessary,\" Franz said. At Air France-KLM, \"measures undertaken in the context of the plan Transform 2015 are starting to have a significant impact on costs,\" a statement said. Pointing to \"a difficult economic environment in Europe, but with a good level of activity in the other markets,\" the group reiterated its goal of reaching a second half operating profit above the year-earlier figure of 195 million euros. Meanwhile, the Franco-Dutch airline does not plan to raise its holding in Italian partner Alitalia next year, chief financial officer Philippe Calavia told a telephone news conference. Deutsche Bank analysts concluded that the positive stock market reaction showed investors believed that Air France-KLM was \"on the path to success.\" Goodbody analyst Nonal O\'Neill said: \"Much like Air France-KLM, Lufthansa management has maintained its outlook, citing lack of visibility into winter. \"At first glance this is a solid set of results,\" he concluded. - Dow Jones Newswires contributed to this story -

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