Air France surprises with speed of recovery

Air France-KLM is climbing well away from financial crisis, the airline group said Friday, releasing results that show a cut in losses and sharp rise in operating profits. The speed of the turnaround surprised analysts, and shares in the airline, the second-biggest in Europe after German Lufthansa, surged. The group, which was in severe financial crisis at the end of 2011, said that restructuring was paying off.
It said its recovery programme, called "Transform 2015", would end next year and it was ready to roll out its next five-year strategy, called "Perform 2020", which would focus on competitiveness and growth. The group has already begun equipping its aircraft with facilities for an improved business class. It reported a small net loss for the second quarter of 6.0 million euros and would have made a profit but for a 106-million-euro write-down of assets in its freight division, where demand was slower than expected to recover.
For the first half, a net loss was cut by nearly a quarter from the equivalent figure last year to 614 million euros ($826 million) from nearly 800 million euros at the same time last year. But the group nearly tripled second-quarter operating profit to 238 million euros. However, sales in the second quarter fell by 1.4 percent to 6.4 billion euros. For the first half, they fell by 1.8 percent to 12.0 billion euros, owing mainly to unfavourable exchange rates.
The price of shares in the group was showing a gain of 4.93 percent to 9.05 euros in early trading. The overall French stock market was down 0.63 percent. "Despite a tough operating environment, the Air France-KLM Group maintained the momentum of its recovery in the first half of 2014, by halving its operating loss," chairman Alexandre de Juniac said in a statement. "Quarter after quarter our results are consistently reflecting the benefits of the productivity measures implemented under Transform 2015."
The group had continued to adapt the services it offered. "More than a third of long-haul KLM's fleet is equipped with the new world business class. The first Air France aircraft equipped with the new cabins has started flying to New York." The group said it aimed to reduce net debt from 5.4 billion euros at the end of June to 4.5 billion euros next year.