Latest News
HomeAviationKLM: Operating income for the quarter ending june 30, 2001 decreased to EUR 23 million

KLM: Operating income for the quarter ending june 30, 2001 decreased to EUR 23 million

KLM<.> today reports a First Quarter Operating Income of EUR 23 million down from EUR 100 million last year…

KLM<.> today reports a First Quarter Operating Income of EUR 23 million down from EUR 100 million last year. Deteriorating global economic conditions resulted in declining underlying demand and pressure on yields. Net Income amounts to EUR 19 million or EUR 0.39 per common share, a year-on-year decrease of EUR 24 million.



Leo van Wijk, President and CEO said: Despite the deterioration of economic conditions and the adverse effects on our operating environment, we still achieved an operating profit. This is a relatively robust performance in our industry.



OPERATING PERFORMANCE



Operating revenues for the First Quarter reached a level of EUR 1,712 million, a decrease of EUR 38 million or 2 percent versus the comparable period last year. Group traffic revenues, which comprise 90 percent of total operating revenues, remained at the same level as last year, despite the fact that Cargo revenues declined by EUR 16 million, or 6 percent. The decrease in non-traffic related revenues of EUR 39 million, or 18 percent, was caused by the de-consolidation of Cargo Service Center following the sale of this previously fully consolidated holding and the fact that last years number includedrevenues from temporarily leased-out excess capacity.



In spite of a deteriorating economic environment, we still recorded a year-on-year increase in traffic of 1 percent. Yield however, continued its decline, and for the first time in seven quarters showed a decrease of 1 percent. Passenger traffic was flat against last year, while yield declined by 1 percent. Cargo traffic showed a year-on-year increase of 1 percent, while cargo yields remained flat despite significant pressure on price levels in the market place. This can in part be attributed to having secured long term contracts with global forwarders, and in part to the success of KLM`s differentiated time sensitive product offering, which commands higher than average yields.



Operating expenses excluding fuel costs rose by EUR 10 million, or 1 percent, despite an increase in capacity of 3 percent. Including fuel (which constituted 16 percent of total operating expenses), operating expenses rose by 2 percent due in part to the high US dollar exchange rate. Fuel expense rose by EUR 29 million, or 12 percent, reflecting the impact of the higher dollar, as well as increased fuel consumption following the capacity increase and a year-on-year increase in fuel price.



Company unit revenues declined by 4 percent (5 percent excluding currency effect), largely the result of an increase in capacity of 3 percent, which remained underutilized due to stagnating growth of demand. Manageable company unit costs (unit costs excluding currency and fuel price effects) rose by 2 percent, largely due to the increase in capacity related costs. Including currency and fuel price effects unit costs rose by 4 percent.



FINANCIAL ITEMS AND TAX



Financial Income and Expense showed a decrease of EUR 8 million due to lower US dollar interest rates. Result of the sale of assets of EUR 11 million relates to the sale of 3 aircraft. Result of holdings saw a decrease versus last year. Due to the envisaged sale, Braathens` results are no longer reported. The result on sale of holdings consists of the sale of a part of our Equant shares.



The effective tax rate of 21 percent is lower than the statutory tax rate of 35 percent, since the Result on sale of holdings is exempt from tax.



CHANGE IN ACCOUNTING POLICIES



In line with international developments, KLM changed its accounting policies with respect to heavy maintenance costs fleet and derivatives effective April 1, 2001. This resulted in a positive effect on equity of EUR 71 million (net of tax).



OPERATIONAL PERFORMANCE



Operational integrity showed a strong improvement compared to the same quarter last year. KLM`s on-time arrival performance at Schiphol was close to 90 percent, further solidifying KLM`s position as the highest ranked with respect to on-time performance amongst the major hub-and spoke carriers in Europe. This excellent on-time performance record resulted in a significant year-on-year decrease of number of passengers, who missed their connection. Departure punctuality improved as well.



These results were achieved in the face of an increase in Air Traffic Control related delays in Europe for the industry as a whole. Improved operational integrity, including on-time performance, connections made and baggage resulted in a further decrease of service recovery costs and a measured improvement in passenger appreciation.



PRODUCT DEVELOPMENT AND E-COMMERCE



In May, as planned, KLM and Northwest Airlines completed the reconfiguration to the new World Business Class, enlarging the pitch from 47 to 60. Opodo, the new Online Travel Portal initiative of nine European airlines, including KLM, expects to start online operations at the end of this year. KLM has joined this initiative to participate in the steadily growing Internet travel market and to take advantage of additional distribution channels.



OUTLOOK



Effects of the economic downturn have become more pronounced during this Quarter. Due to the uncertainty regarding both the full impact of the downturn on the airline industry as well as the timing of economic recovery we take a cautious stance on our forecast. However it appears inevitable that Operating Income for the Full Year will be well below last year.



Continued rationalization of our network, focused deployment of assets as well as continued cost containment remain areas of management attention.

12/07/2024
11/07/2024
10/07/2024
09/07/2024
08/07/2024