Air France-KLM beats profit expectations as it lifts fuel forecast

Air France-KLM Surpasses Profit Forecast and Raises 2026 Fuel Cost Outlook

Air France-KLM's Financial Performance and Strategic Adjustments

(Corrects Bas Brouns position to CFO, not CEO, in paragraph 10)

By Joanna Plucinska and Gianluca Lo Nostro

Third-Quarter Results and Market Context

LONDON, Nov 5 (Reuters) - Air France-KLM exceeded third-quarter operating profit expectations on Thursday, but cut its capacity growth forecast for the year and raised its projected fuel bill.

European carriers are grappling with the spiralling cost of fuel, although some network carriers such as Air France-KLM and Lufthansa have remained resilient thanks to hedging as well as strong investment in pricier premium offerings.

Spot Northwest European jet fuel prices have fallen 12% this week to their lowest level since August, tracking a broader decline in oil prices.

CEO Statement on Performance

"Demand across key strategic markets, combined with strong commercial execution, drove an increase in unit revenue, while continued cost discipline - alongside a well-managed fuel bill - kept unit costs broadly stable," said CEO Ben Smith.

Profit Figures and Revised Forecasts

Air France-KLM posted a third-quarter operating profit of €1.34 billion, compared with €1.1 billion as projected by analysts in a company-compiled consensus. That was driven in large part by strong demand for non-stop flights to India and Asia and the success of its expanding premium offering.

Updated Capacity and Fuel Cost Projections

However, the airline group revised its capacity projection for 2026 to 2%, replacing an earlier range of 2% to 3%. Fuel costs for 2026 are also now expected at $9.2 billion, up from an earlier forecast of $8.9 billion.

KLM's Restructuring Measures

Job Cuts and Organisational Changes

KLM TO CUT JOBS

Its Dutch arm, KLM, said in a separate statement that the number of positions at KLM will drop by almost another 15%, resulting in around 1,000 fewer positions out of 5,000 in total affected by the latest reorganisation.

Comments from KLM CFO Bas Brouns

"Improving our annual earnings by €1 billion is essential to delivering our strategy," said KLM's finance chief, Bas Brouns, who called the measures "far-reaching" and "sometimes painful".

Additional Cost-Saving Initiatives

Aiming to slash costs and increase profitability, KLM also flagged fleet modernisation and a reorganisation of activities in ground handling, cargo and engineering and maintenance.

(Reporting by Joanna Plucinska in London and Gianluca Lo Nostro in Gdansk; Editing by Alexander Smith and Louise Heavens)