European airline giants Lufthansa Group and Air France KLM made better than expected profits during the key summer period thanks to strong passenger sales.
The continent’s two biggest carriers by revenue both beat City analysts forecasts for operating profit in the third quarter from July to September.
Lufthansa Group made an operating profit of €648 million for the three month period – up by 6.2 per cent on the same quarter last year. Meanwhile Air France KLM saw operating profit rise by 27.5 per cent to €506 million for the same period.
But both airlines warned that cargo revenue had deteriorated during the quarter which is likely to be an indicator of a slowing global economy.
Lufthansa admitted the current climate was “unsettling” for the company with increased competition from no-frills carriers and Middle Eastern airlines, alongside “stubbornly high” fuel costs.
“The unrelentingly high fuel price combined with the weak euro and falling income from fuel hedging will lead to massive additional fuel expenses for Lufthansa, which over the full year are currently estimated to be €1.1 billion higher than last year,” said Lufthansa’s executive board in its report to investors.
“Bookings are being made at much shorter notice and the outlook for the winter period has worsened for air freight. There is no recovery in sight through to mid-2013.”
Air France KLM said its performance had been “satisfactory” with the exception of cargo.
Both airlines are looking to reduce staff numbers with Air France KLM set to cut 1,300 staff at KLM on top of 5,000 posts being lost at Air France. Lufthansa is also cutting 3,500 admin roles and up to 1,000 in its catering department.
“We are fundamentally modernising our organisation and making it more efficient,” said Lufthansa. “We are reinventing the way in which we work together.
“But more changes are necessary. Some of them will not be easy for our staff and our organisation, and some of them will even be painful.”