BERLIN/PARIS: Air France-KLM expects ticket prices to be positive in the first quarter of this year and will offer more seats on routes to Asia and Latin America to meet demand, although competition from high-speed trains was biting in France.
The Franco-Dutch airline reported on Friday an operating result of €1.488 billion, up 42 percent but slightly missing the average analyst forecast for €1.53 billion in a company-compiled consensus.
The group reported a net loss of €274 million for 2017 due to a €1.4 billion charge linked to a new pension deal for KLM pilots and cabin crew.
Like other major European airlines, the Franco-Dutch carrier benefited from low oil prices and strong travel demand last year, while the collapse of Monarch and Air Berlin has removed some competition from the market.
Air France-KLM is also benefiting from a return of travelers from Asia and Latin America. It plans to increase capacity by 3-4 percent overall on its main passenger network this year.
“We have been helped by the good environment,” Chief Financial Officer Frederic Gagey said, adding Air France-KLM’s increase in profit was also helped by stable unit costs.
The group had set an initial target early last year to reduce unit costs by 1-1.5 percent, but added caveats to that at its third-quarter results. It said it was aiming for a reduction of 1-1.5 percent this year, excluding the impact of currency, fuel and pension charges.
Gagey said forward-bookings on long-haul flights were up 1 percentage point in February, up 4 percentage points in March, down 1 percentage point in April because of Easter, and up 2 percent for May.
Analysts expect Air France-KLM to come under pressure from rising fuel costs this year, and expansion of low-cost rivals in Paris and Amsterdam. It will also have to negotiate increased pressure on labor costs, with unions having called for a strike on Feb 22 to support demands for a 6 percent pay increase.
Gagey said unit revenues in the domestic market in France had come under pressure from new high-speed train routes to Bordeaux and that the group was closely watching the development of new low-cost players.
“But it seems that launching low-cost long-haul flights without connecting services is challenging,” Gagey said, pointing to Norwegian Air Shuttle, which on Thursday reported a bigger than expected loss for the last quarter of 2017.
Traditional rivals IAG and Lufthansa are due to report over the next few weeks.
Air France-KLM positive on ticket prices, to offer more seats
Air France-KLM positive on ticket prices, to offer more seats
Closing Bell: Saudi benchmark index closes lower at 10,540
RIYADH: Saudi equities ended Wednesday’s session lower, with the Tadawul All Share Index falling 55.13 points, or 0.52 percent, to close at 10,540.72.
The sell-off was mirrored across other indices, with the MSCI Tadawul 30 Index retreating 5.79 points, or 0.41 percent, to close at 1,393.32, while the parallel market Nomu slipped 74.56 points, or 0.32 percent, to 23,193.21.
Market breadth remained firmly negative, as decliners outpaced advancers, with 207 stocks ending the session lower against just 51 gainers on the main market.
Trading activity moderated compared to recent sessions, with volumes reaching 123.5 million shares, while total traded value stood at SR2.72 billion ($725.2 million).
On the sectoral and stock level, Al Moammar Information Systems Co. led the gainers after surging 9.96 percent to close at SR172.30, extending its rally following a series of contract announcements tied to data center and IT infrastructure projects.
Al Masar Al Shamil Education Co. climbed 4.89 percent to SR27.48, while Naqi Water Co. advanced 3.36 percent to SR58.50. Al Yamamah Steel Industries Co. and Al-Jouf Agricultural Development Co. also posted solid gains, rising 3 percent and 2.86 percent, respectively.
Losses, however, were concentrated in industrial names. Saudi Kayan Petrochemical Co. fell 3.67 percent to SR4.73, while Makkah Construction and Development Co. slid 3.44 percent to SR80.
Saudi Tadawul Group Holding Co. retreated 3.28 percent to SR147.50, weighed down by broader market weakness, and Saudi Cable Co. declined 3.18 percent to SR143.
Alkhaleej Training and Education Co. rounded out the top losers, shedding just over 3 percent.
On the announcement front, BinDawood Holding announced the signing of a share purchase agreement to acquire 51 percent of Wonder Bakery LLC in the UAE for 96.9 million dirhams, marking a strategic expansion of its food manufacturing footprint beyond Saudi Arabia.
The acquisition, which remains subject to regulatory approvals, is expected to support the group’s regional growth ambitions and strengthen supply chain integration.
BinDawood shares closed at SR4.68, up 0.43 percent, reflecting a positive market reaction to the overseas expansion move.
Meanwhile, Al Moammar Information Systems disclosed the contract sign-off for the renewal of IT systems support licenses with the Saudi Central Bank, valued at SR114.4 million, inclusive of VAT.
The 36-month contract is expected to have a positive financial impact starting from fourth quarter of 2025, reinforcing MIS’s position as a key technology partner for critical government institutions. The stock surged to the session’s limit making it the top gainer.
In a separate disclosure, Maharah Human Resources confirmed the completion of the sale of its entire stake in Care Shield Holding Co. through its subsidiary, Growth Avenue Investments, for a total consideration of SR434.3 million.
The transaction involved the transfer of 41.36 percent of Care Shield’s share capital to Dallah Healthcare, with Maharah receiving the full cash proceeds.
Despite the strategic divestment, Maharah shares closed lower, ending the session at SR6.12, down 1.29 percent.
