Air France-KLM said Wednesday its net profit was nearly wiped out in its fiscal second quarter despite higher passenger traffic and revenue as sky rocketing fuel costs led to a euro214 million ($292 million) increase in its fuel bill during the July to September period.
Europe's largest airline says in a statement it made euro14 million in net profit during the quarter, down from euro290 million a year earlier. A 14.2 percent increase in fuel costs offset a 7.9 percent rise in passenger traffic and a 2.1 percent rise in revenue during the quarter.
Air France-KLM chairman Jean-Cyril Spinetta said the airline will prepare a plan to restructure its short- and medium-haul business while cutting costs and debt. Spinetta says they will present the plan during the first quarter of 2012.
The airline also warned it will make an operating loss in the October-December quarter and for all of calendar year 2011. Air France-KLM's fiscal year is being exceptionally shortened to nine months as the company shifts to a calendar fiscal year beginning in 2012, from the April-to-March fiscal year it has maintained until now.
In a statement, Spinetta said the airline's attempts to restore profitability via hundreds of millions of euros in cost cutting have been insufficient in the face of the global economic slowdown that is weighing on traffic and higher oil prices.
Last month the airline replaced Pierre-Henri Gourgeon as chief executive in a shake-up it said was necessary to improve its "operating and financial performance."
Gourgeon was replaced by Alexandre de Juniac, while Spinetta took over as head of the Air France-KLM holding company.