Jean-Cyril Spinetta became the latest airline ceo to warn that the rising cost of oil will hit his carrier's profits.
The chairman and ceo of Air France KLM said that profits could fall by up to a third and that fares would go up as carriers passed on their extra fuel costs.
He acknowledged that rising fares could deter people from flying.
AF KLM reported record operating income for the financial year 2007-2008 of 1.41bn, an increase of 13.1% on the 12 months.
Its consolidated net profit was 748m for the year ending March 31, a drop of 16% on the 2006-2007 result.
But this took into account a 530m provision for possible fines from an anti-trust investigation into airline cargo prices.
Mr Spinetta praised the "excellent quality of our results, which met all our objectives."
But he warned: "The financial year 2007-08 nevertheless witnessed a deterioration in the economic environment during the second half, linked to the crisis in the financial sector and the sharp rise in the oil price.
"The current year is set to be challenging, with the oil price and the global economy creating significant uncertainty."
“We believe however that our strategic advantages and the efficiency of our fuel hedging, combined with a tough stance on costs and further potential synergies made possible by the new, more integrated organisation between Air France and KLM, will ensure that we remain comfortably in profit.
"Under these conditions, and based on an oil price of $120/bbl, our objective is of operating income in the region of 1bn."
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AA cuts planes and capacity
American Airlines, one of the world's largest carriers, announced swingeing cuts in its fleet and capacity because of the soaring price of oil.
The Texas-based carrier said it would "retire" at least 75 mainline and regional planes and reduce domestic capacity by 11-12%.
The airline said it would also pursue other forms of income. These include a $15 fee for first checked in baggage and increased reservation and oversized bag fees.
The moves came as crude reach a record $135 per barrel although it later fell back to $129.
Gerard Arpey, AA's chairman and ceo, said: "The airline industry as it is constituted today was not built to withstand oil prices at $125 a barrel, and certainly not when record fuel expenses are coupled with a weak US economy.
"Our company and industry simply cannot afford to sit by hoping for industry and market conditions to improve. We must work to overcome our near-term challenges and to secure our company's long-term future for the benefit of our shareholders, customers and employees.
"We must find ways to cover the cost of providing our services so that we can remain viable and have the resources to reinvest in our company for the future.
“Those goals are central to the actions we are outlining today."
In the same week, Finnair has warned that the price of oil will hit profits while SAS has written to its suppliers asking them to cut 10% off their prices.
A statement by Jukka Hienonen, Finnair's president and ceo, said oil prices and falling passenger demand would "weaken" the airline's earnings.
"With the current outlook, we can assume that the operational result for January-June and therefore the full year will fall short of last year's levels.
"The effects of the world economy on air transport are already evident as a trend that will decrease passenger demand.
“We are now planning to reduce capacity, particularly in Europe. Due to the short advance booking horizon, it is difficult to make forecasts far into the future," he said.
SAS has written to its suppliers asking for a 10% cut in prices because of oil costs.
Patrik Knutsson, SAS's chief procurement officer, said: "We are under pressure due to declining margins.
"The reason for this is that fuel prices have risen by 100% since 2007, at the same time as we have experienced an economic slowdown with declining air ticket prices as a result."
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