Air France KLM posted a stronger-than-expected 56 per cent jump in second-quarter operating profit today, driving up its shares on traffic growth and cost savings from last year's Franco-Dutch merger.
The European airline group also firmed up a confident outlook for the rest of the year, announcing figures that suggested 2005/06 operating income would gain at least 50 per cent to more than €750 million.
The world's largest airline by revenues reported sales for its July-September quarter up 10 per cent at €5.64 billion, beating an average forecast of €5.55 billion.
Operating profits rose 55.8 per cent to €528 million, compared with a forecast of €417 million, and net profit came in at €717 million, up more than threefold due to the sale of a stake in the Amadeus reservations system.
Air France KLM, which had previously predicted a "significant" increase in its full-year operating profit, said it expected to add a "clearly positive" profit in the second half to the 750 million euros generated in the first half.
"The merger is living up to its promise and in fact doing better than expected," deputy chief executive Pierre-Henri Gourgeon said.
European airlines are reaping the benefits of growing passenger numbers, reduced fuel costs and higher fares as well as a pickup in business travel. But the industry still faces tough global conditions as it inches back from recession, highlighted by the recent bankruptcy filing of Air France's U.S. partner Delta.
And some investors have expressed concerns over French plans to impose a tax on airline tickets to finance extra aid for Africa and fight disease and global poverty.
Under plans expected to be approved by the French government on Wednesday, passengers travelling to destinations in the European Union would be asked to pay a tax of €1 on economy class tickets and €10 on business or first class tickets.
The tax for passengers travelling outside the EU in economy class would €4, rising to €40 for first or business class. The measures would not take effect until July 2006.