Air France-KLM 2Q Profits Almost Double

Shares in the Franco-Dutch airline jumped 7.4 percent to euro23.75 ($35.21) in early Paris trading.

Net profit for the quarter ended Sept. 30 rose 97 percent to euro736 million ($1.09 billion), boosted by a euro202 million ($300 million) exceptional gain from the leveraged buyout of its Amadeus reservation system, the company said in a statement.

The result came in well above an average estimate of euro636 million ($945 million) from analysts polled by Dow Jones Newswires.

"Robust global growth continues to underpin demand, especially on long-haul where our strong network remains a major advantage," chief executive Jean-Cyril Spinetta said.

The airline, formed by the merger of Air France and KLM three years ago, said passenger load factor -- or the amount of capacity taken up -- increased slightly to 84.6 percent. The group carried 20.5 million passengers in the three months, up 4.4 percent from a year earlier.

Demand has held up "remarkably" well, despite the crisis in financial markets, Spinetta said.

"We don't see in reservations any variation in demand," he told journalists in Paris.

Chief financial officer Philippe Calavia told journalists he sees no signs of weakening in passenger traffic despite higher ticket prices due to rising fuel costs.

The company said the "efficiency" of its hedging measures and the decline in the U.S. dollar allowed it to contain the rise in its fuel bill to just 1.8 percent in the quarter.

Spinetta said the company continues to reap the benefits of a three-year cost-cutting plan initiated last spring. Operating costs rose 3.6 percent in the second quarter to euro5.77 billion ($8.56 billion).

Revenues were up 6 percent in the quarter at euro6.49 billion ($9.64 billion). Total passenger revenue rose 6.1 percent to euro5.2 billion ($7.7 billion). Cargo revenues fell 0.3 percent to euro722 million ($1.07 billion) in a "difficult operating environment" and despite an upturn in traffic from the first quarter.

Operating profit gained 28 percent in the second quarter to euro725 million ($1.07 billion).

Full-year results will be impacted by an Oct. 25-29 strike by flight crews which led to the cancellation of 28 percent of Air France group flights over the period.

The airline estimates the strike costs at euro60 million ($88.96 million). Taking this into account, Spinetta confirmed the airline's full-year objectives of a further rise in operating income and a return on capital employed of 7 percent after tax, up from 6.5 percent last year.

Air France-KLM said it plans to delist its American Depository Receipts from the New York Stock Exchange for savings of about euro3.5 million a year ($5.12 million). Share transactions in New York represent about 2 percent of the total daily trading volume in the company's shares, Calavia said.

In the year, Air France-KLM stock is down 26 percent on investor fears about higher oil prices which have hurt airline shares worldwide.

Calavia said that the airline's market capital is now below its equity, which he described as "an overreaction that's in no way justified by our activity."

Concerns that Air France-KLM will take over Italy's loss-making airline Alitalia SpA have also hurt the stock.

Calavia said the airline is "continuing to weigh the risks and opportunities" of an alliance with either Alitalia or Spain's Iberia Lineas Aereas de Espana SA. A decision on Alitalia will be made by the end of this month or early next month, he said.