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Air France-KLM dampens spirits in the markets as flies towards a £1.3bn loss

SHARE prices dropped across the airline sector yesterday after Air France-KLM warned that it expected fourth quarter losses to be “of the same order” as its €535m (£466.4m) operating loss in the same period last year.

The airline’s third quarter statement revealed an operating loss of €245m in the three months to 31 December. If fourth quarter projections are accurate, total losses for the year will top €1.3bn.

The company has suffered from taking out fuel hedges, intended to stabilise costs, when oil prices were at a peak. It said the negative effects of this had begun to fade during the previous quarter.

Markets took little notice of promises from the company’s chief executive that the recovery that had been expected to mitigate losses would arrive soon. Pierre-Henri Gourgeon said: “The recovery in unit revenues has come later than we had foreseen and should, we hope, be evident around the end of this quarter or early next quarter.”

The company also pointed out that it had reduced its third quarter net loss from €508m to €295m year on year.

But the news that losses would be greater than expected, even for a traditionally weak period for airlines, sent ripples through the market. Air France was the worst affected, with shares plunging more than 11 per cent. Lufthansa dipped 3.9 per cent.