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Air France-KLM's share price boost hides future concerns


Air France-KLM's share price boost hides future concerns


Air France-KLM’s better than expected second quarter performance cheered investors.

Shares of the group, formed by the merger of French and Dutch giants in 2004, rose by 18.6 percent on the Paris Stock Exchange – the highest gainer of the day.

The company’s second quarter results show that the two billion-euro savings plan, which management says is key to the company’s survival, has begun to shore up the balance sheet.

In the second quarter, Air France-KLM’s operating loss halved to 66 million euros. The company’s net loss, however, increased to 895 million euros due to charges for the restructuring plan.

During this period, passenger numbers increased by 2.4 percent and occupancy rates improved as well. This boosted the Franco-Dutch giant’s revenue by 4.5 percent to 6.5 billion euros.

Despite this, the company is not yet out of the woods. The management aims to reach a 195 million-euro operating profit in the second half of the year and complete the comprehensive restructuring plan by 2015.

However, economic uncertanties and problems with trade unions continue to impact shares. Despite the strong rise on Monday, shares have lost almost half their value within the last year.

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