Page last updated at 20:25 GMT, Thursday, 23 October 2008 21:25 UK

Airlines hit economic turbulence

Air France-KLM plane
Air France-KLM has had to revise passenger predictions greatly

US Airways and Air France-KLM have both suffered sharp share falls due to the current economic slowdown.

American airline US Airways saw its shares fall 15.4% after it unveiled losses of $865m (537m) for the third quarter of the year.

Meanwhile, European airline Air France-KLM's shares closed at their lowest level in over three years, down 12.3% at 11.87 euros.

It predicted zero growth for 2009 and 2010 and said traffic would fall.

US Airways' losses included a $488m (301m) loss from its fuel hedging program that was meant to protect it against higher oil prices by pre-paying for fuel at a set price.

But since the airline purchased the jet fuel, the price of oil has steadily fallen, meaning the carrier has been paying more than the average price rather than less.

In contrast, in the third quarter of 2007, US Airways made a profit of $177m.

Bleak forecast

Air France-KLM shares also plunged to their lowest level since July 2005 as passenger numbers in its core European market fell 2.5% last month, the steepest one-month drop in passenger numbers since October 2007.

The drop in travellers overshadowed gains on the company's routes to the Americas and Asia-Pacific regions.

The company said it expected no growth in capacity for two years, a major shift from its prediction last August of a 2% increase in capacity for winter 2008 and summer 2009.

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