Air France-KLM third-quarter profit and KLM cost-cutting plan, Digi Mart USA News (Paris): The Franco-Dutch air transport group Air France-KLM announced on Thursday measures to reduce its costs in the Netherlands, following a successful summer despite high fuel prices.
Net profit for the third quarter, the peak summer season, rose 22% to 938 million euros. The stock price rose by about 10% at the opening in Paris.
For the first nine months of the year, a period marked by war in the Middle East and rising jet fuel prices, profit fell 25% to 877 million euros.
The group expects fuel costs to remain very heavy. In its forecasts, a tonne of jet fuel, which will cost nearly 1,600 dollars in the current quarter, is expected to be around 1,400 to 1,500 dollars in the first half of 2027.
The KLM division, which includes KLM and Transavia Netherlands, is less profitable than Air France, which includes Air France and Transavia France. It announced a set of new savings measures in a statement.
“The number of positions at KLM, which has already declined in recent years, will decrease by a further 15%,” the Dutch division said. “About 5,000 positions have been or will be reorganized, with work organized differently.” The unit aims for an annual improvement in results of one billion euros.
According to Air France-KLM, the measures include a revision of collective agreements aimed at “strict control of payroll changes,” the reorganization of “certain activities related to ground operations, cargo and maintenance,” sometimes through outsourcing and sometimes through reintegration, and the end of operating the “oldest” aircraft, which consume the most fuel.
Chief Executive Benjamin Smith described the group’s third quarter as “resilient.”
“Demand in our key strategic markets, combined with strong commercial discipline, led to higher unit revenues, while continued cost control, together with well-managed fuel costs, kept unit costs broadly stable,” he said.
Revenue rose 8% in the quarter to 9.916 billion euros. At constant exchange rates, the increase was 12%.
The group said strong unit revenues fully offset the impact of higher fuel prices amid the Middle East crisis, and that rigorous cost control limited the rise in unit costs to just 0.1%.
Air France-KLM said it has hedged 54% of the fuel it expects to consume in 2027, compared with 68% in 2026. The group maintains a practice of securing predictability on at least half of its fuel needs, although it has set an undisclosed price ceiling above which it does not sign supply contracts.
Air France-KLM raised its estimate of its 2026 fuel bill to 9.2 billion dollars, 300 million dollars more than its previous forecast.
RBC Capital Markets said the company continues to benefit from difficulties at some competitors, and noted that one question is how long the benefit of avoiding the Gulf for travel to Asia will persist.
