Rising costs impact AirFrance-KLM’s profits

AirFrance-KLM, soon to be a part-owner of SAS, reported a decrease in second-quarter operating profit to 513 million euros compared to last year’s 733 million euros, due to higher costs such as fuel and wages. Sydbank’s Jacob Pedersen notes significant challenges for airlines in passing costs to customers via ticket price rises. The group attempted to offset these costs with a hiring freeze and new efficiencies. Despite these difficulties, the company did manage to raise its revenue from 7.6 billion euros last year to 7.9 billion euros this quarter. However, the upcoming Paris Olympics have adversely affected revenue, with a 40 million euro shortfall in Q2, and an anticipated 150-170 million euro impact in Q3. AirFrance-KLM, along with a consortium, is set to take ownership of SAS starting September 1st.