PARIS: Air France-KLM Group reported a 35 percent earnings increase for 2016 and said it will boost passenger capacity this year in an effort to win back the initiative in the lucrative long-haul market.
Operating profit increased to €1.05 billion ($1.1 billion) from €780 million in 2015, helped by a lower fuel bill and productivity gains at Dutch arm KLM, Europe’s biggest airline reported. Analysts had predicted a figure of about €950 million, based on eight estimates.
Chief Executive Officer Jean-Marc Janaillac said in a statement that while political and economic uncertainties are continuing to weigh on fares amid industry overcapacity, the decline in unit revenue slowed to 0.7 percent in January, indicating a “resilient start” to the year. The group will therefore lift capacity as much as 3.5 percent in 2017 “in order to regain the offensive” in long-haul markets and boost performance on medium-distance routes.
The unit-revenue trend and improved forward bookings point to a recovery in demand and pricing, Chief Financial Officer Frederick Gagey said on a conference call, adding that the company is encouraged though “not euphoric.”
Air France-KLM rose as much as 49 cents, or 8.9 percent, to €5.98, and traded at €5.9 in Paris. The stock has gained 15 percent this year after losing 26 percent in the course of 2016.
Profit at the main Air France arm fell 54 percent to €372 million, held back by the effects of visitors staying away amid a spate of terror attacks spanning Paris to Nice and two strikes involving pilots and cabin crew opposed to cost cuts proposed by former chief Alexandre de Juniac.