Air France-KLM revises forecast; British Airways slips; Finnair gains


Air France-KLM (-1.3%) shares fell despite CEO Pierre-Henri Gourgeon announcing the group has upwardly revised its operating result expectations for the 12 months ending 31-Mar-2011, given the revenue performance of recent months, together with the current level of forward bookings.

  • Air France-KLM revises operating result expectations for the fiscal year, expecting positive results.
  • KLM plans to reduce fares to compete with low-cost carriers.
  • British Airways may face a fine of up to EUR80 million for fixing cargo prices.
  • Finnair strike ends, resulting in flight cancellations but schedules expected to return to normal.
  • TUI Travel and Aer Lingus experience stock gains.
  • Vueling and easyJet face stock declines.

Air France-KLM now expects operating results to be positive, except in the case of a major adverse event. The group previously stated it expected to break even at the operating level for the year, excluding the impact of airspace closure in Apr-2010, with losses estimated at EUR158 million. Air France-KLM will report 1H2010-11 results on 17-Nov-2010.

See related CAPA Profile: Outlook, Forecasts, Guidance

In other KLM news, Director Bram Gräber stated the carrier plans to reduce fares to key European cities to better compete with LCCs, with fares available for less than EUR100.

British Airways (-0.3%) also slipped, after reports it may be fined up to EUR80 million (USD112 million) in Nov-2010 for fixing cargo prices with other carriers. BA, Air France-KLM, SAS (-0.8%) and several other carriers were charged by the European Commission in Dec-2007 with taking part in an air freight cartel.

The Commission is able to fine companies up to 10% of their global sales for breaching the EU regulation. The Commission is reportedly considering a fine of between EUR60 million to EUR80 million. The penalties are expected to be announced on 09-Nov-2010. The probe initially targeted more than 20 carriers, but not all are expected to be found guilty. Lufthansa (+0.2%) said it had immunity as it alerted the Commission to the cartel.

See related CAPA Profile: Passenger Rights and Consumer Affairs

Finnair (+4.2%) gained on news the the Finnish Aviation Union (IAU) concluded strike action on 26-Oct-2010 after aircraft mechanic staff and management accepted a mediation proposal. The strike resulted in 30 flight cancellations over the two days, with Finnair, Finncomm and Blue1 all cancelling flights. Finnair stated the cancellations mainly affected domestic flights. Foreign carriers were not affected. Schedules are expected to return to normal on 27-Oct-2010.

Elsewhere, TUI Travel (+3.3%) and Aer Lingus (+2.9%) also gained for the day. Vueling (-2.2%) and easyJet (-1.8%) suffered the biggest declines.

Europe selected airlines daily share price movements (% change): 26-Oct-2010

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