Air France profits soar 18.9%

Air France has beaten high fuel costs to post a big profit

Air France's profits soared 18.9% in the last year after it kept costs down to offset the 60% rise in the price of fuel.

Net profit climbed to 421m euros ($360m), the airline said while it cautiously forecast a similar performance for this year.

"We have every right to be satisfied with the results for the last financial year," Air France chairman Jean-Cyril Spinetta said in a statement.

The figures from Europe's third largest airline compare favourably to those unveiled recently by rivals Lufthansa and KLM, and outstripped analysts' forecasts.

Strong performance

"Despite the adverse effect of the very steep increase in fuel prices and the cost of integrating our regional carriers, these results confirm our strong sales performance," Mr Spinetta added.

The good performance would enable Air France to increase profit-sharing for employees by 46% and to pay shareholders a net dividend up 57% from last year, he added.

Air France said fuel costs increased by 60% during the year and that the restructuring costs of its regional airlines dragged down profits by 65m euros.

Good flight

"In light of these figures and if there is no downturn in the current economic climate on Air France's markets, Air France aims at achieving results in the current financial year on a par with those of the previous year," Air France said.

Earlier this month, KLM blamed its weaker-than-expected full-year profits on high fuel costs and the general global economic slowdown.

German rival Lufthansa, which has been plagued by pilot strikes in recent weeks, said last month slowing US growth would make it more difficult to achieve profit targets in 2001.

Alitalia alliance

Alliance talks between Air France and Italy's Alitalia have been constructive and may well lead to an agreement, said Mr Spinetta.

"Talks with Alitalia are in progress. They are being carried out in an extremely serious and constructive manner. They are becoming more intense, but no alliance has yet been concluded," he said.

Analysts say closer ties between the two airlines would allow them to tap into the lucrative and under-developed north Italian market.

The Italian carrier dominates its domestic market, but long-haul flights departing from Italy have been ceded to its major European competitors, including Lufthansa.

Air France, with its international reach and hub at Roissy-Charles de Gaulle airport outside of Paris would give Alitalia the links to major foreign destinations it lacks.