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KLM profits hit by war concerns
AMSTERDAM, The Netherlands (CNN) -- KLM Royal Dutch Airlines on Monday warned that full-year profit targets were unlikely to be met with economic conditions worsening and fears about war hitting passenger numbers. KLM's stock, which has fallen more than 50 percent from a peak of 18.41 euros in March 2002, dropped more than 6 percent to 9.15 euros in early Amsterdam trading on Monday. Europe's fourth-largest airline had previously forecast an operating profit for the full year ending in March. Chief Executive Leo van Wijk warned last month the company would have to cut costs to prevent another loss in the 2003-04 fiscal year "As the operating environment in the fourth quarter of the current fiscal year will remain difficult, it is unlikely that a positive operating income for the fiscal year ending March 31, 2003, will be achievable,'' said KLM in a statement. "During the quarter ending December, the industry has experienced adverse changes in the operating environment. "The impact of deteriorating economic conditions as well as geo-political instability in certain regions in the world, which also had its effect on oil prices, resulted in lower than expected traffic volumes and yields for the KLM Group during the third quarter of its fiscal year 2002-03." Europe's major airlines, like KLM, British Airways (BAY) and Lufthansa (FLHA), saw passenger numbers slide by more than a third after September 11, 2001. But moves to slash fares and compete with low-cost airlines have returned dividends in the last half of 2002. Industry-wide losses of about $9 billion are expected in 2002, with business travel still not recovered from pre-September 11 levels. December passenger traffic increased by 11 percent after the year-earlier figure was distorted by the impact of the terror attacks on the United States, KLM said. It managed to fill 74.6 percent of its seats, up one percent on the December 2001 figure. KLM has been flying Europe's fullest planes in the recent months, according to industry data, outpacing British Airways and Lufthansa.
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