KLM warns on profit

July 4, 2001 Posted: 1048 GMT

LONDON (CNN) -- KLM Royal Dutch Airlines warned on Wednesday that first-quarter operating profit is expected to be substantially below last year's level.

Europe's fourth-biggest airline joins carriers on both sides of the Atlantic, which are blaming a global economic slowdown, high fuel prices and labour cost for crimping profits.

"Against this background we expect an operating income for the first-quarter, ending June 30, 2001, substantially below the 100 million realized in the same period last year," KLM said.

Shares in KLM fell 4.8 percent to 19.95 in midday trade in Amsterdam. The announcement, KLM's second in three months, knocked the prices of other airlines amid concerns the traditionally busy summer season could suffer from falling demand.

Airline's typically score most of their revenue and profit in the second-half of the year. 

Europe's biggest airline Deutsche Lufthansa (FLHA) dipped 2 percent to 18.70 and British Airways (BAY), Europe's No. 2,  lost 3 percent to 338 pence.

Lufthansa said last month it was cutting its earnings forecast for 2001 to cover the cost of a strike by pilots and pay rises they won. That's another concern for analysts, who say pay talks could further damp profits.

Spanish flag-carrier Iberia, which floated on the Madrid stock exchange in April, is currently in dispute with its pilots. Striking pilots have hit other airlines too, including Hong Kong's Cathay Pacific and U.S. airlines Delta Air Lines and United Airlines.

The pilots, engineers and cabin crew argue that they have sat pat during the industry's profitable years in the 1990s.

KLM's problems are exacerbated by the fact it still has not secured a partnership that would help it to share planes and cut costs. Merger talks with BA collapsed in September.

The airline, which operate transatlantic routes with Northwest Airlines of the U.S., said would miss its target for the current quarter due to declining revenues on its North Atlantic and Asia Pacific routes, which affected both cargo and passenger businesses.

Northwest Airlines said last month it expected a $50 million to $75 million loss in the second quarter due to a U.S. economic slowdown and high fuel prices.

	Want the full story? Search for free company info...
	Enter Company Name:-