Air France KLM has posted a reduced third-quarter profit after higher fuel costs and weaker unit revenue overwrote a steady growth in passenger numbers.
The company made an operating profit of €900 million ($1 billion) in the July-September period, a 16% decline from the same quarter in 2018. Load factor edged 0.2% higher, to 89.8%, even as capacity was increased 1.6% amid long-haul expansion.
Passenger numbers rose 2.1% to 29.1 million, but unit revenue dipped 0.6%, a trend the group expects to persist into the fourth quarter.
Air France-KLM was also hit by stagnation in cargo earnings as a result of global trade tensions. "Air freight capacity is for another quarter significantly higher than the demand development, putting pressure on load factor and yield," it notes.
Chief executive Ben Smith argues that the results show the group's "resilience" in the face of ongoing geopolitical uncertainties and weakening global growth. "Based on long-haul forward bookings – on average ahead of last year – and renewed commitment to a strict cost discipline, we are confident that we can deliver on our annual objectives of reduced unit cost and stable leverage ratio."
Long-haul bookings for November to March are slightly ahead of a year ago, although the weakness in unit revenue is predicted to continue – along with higher fuel costs. Across the full year 2019 the group expects to spend €5.5 billion on jet fuel, a €600 million increase from last year.
The group also took a €100 million impairment charge on the early phase-out of its Airbus A380 aircraft. Net debt fell by €253 million to €5.9 billion.