Air France-KLM and Lufthansa warn of more cost-cutting

Air France and Lufthansa planes Image copyright Getty Images

Two big European airlines have reported improved results but warned more cost-cutting is needed.

Air France-KLM reported a better-than-expected improvement in third quarter earnings while Germany's Lufthansa raised its full year profit target as a result of strong demand and low fuel prices.

There have been strikes at both airlines as they tried to compete with lower-cost rivals.

Shares in both airlines have fallen.

"We cannot expect to fly for too long with a tailwind of low oil prices," said Lufthansa chief executive Carsten Spohr.

While it raised its full year profit forecast, it stressed that "does not incorporate any strike-related costs which might be incurred between now and year-end".

For the first nine months of the year it reported a net profit of €1.75bn ($1.92bn; £1.26bn), up from €482m in the same period of 2014.

Meanwhile, Air France-KLM reported a net loss of €158m for the first nine months, compared with a loss of €533m for the corresponding period last year.

"This improvement is however not sufficient to bridge the competitiveness gap with our competitors or to generate the financial resources required to finance the group's growth," said chairman Alexandre de Juniac, inviting union representatives to resume negotiations.

Lufthansa shares fell 2.9% in Frankfurt, while Air France shares fell 1.5% in Paris.

Last month a German court ordered the end of a strike at Lufthansa, which affected 1,000 flights and was the 13th stoppage in 18 months.

Earlier this month, two Air France managers had their shirts torn as they were forced by angry workers to flee a meeting about job cuts .

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