June 3, 2018 / 12:37 AM / 3 months ago

KLM CEO sees healthy demand in next few months

SYDNEY, June 3 (Reuters) - Dutch airline KLM is seeing healthy demand over the next few months, the key summer period for European carriers, its chief executive said, and a recent fleet renewal programme will help it combat higher oil prices.

“Looking at where we are in terms of loads and traffic, we see healthy demand in Europe and on long haul,” Pieter Elbers told Reuters ahead of the annual International Air Transport Association meeting in Sydney on Sunday.

He declined to comment on yields for summer bookings.

An updated industry profit forecast to be issued on Monday by IATA will be lower as the cost of oil, infrastructure and labour rises, the association said earlier this week.

Elbers said a fleet renewal programme will help the carrier, part of the Air France-KLM group, with new Boeing 787 Dreamliners coming in, 747 jumbo jets being phased out and its ageing fleet of Fokkers being replaced by new Embraer jets.

“With these initiatives we are preparing for a situation with higher fuel prices,” he said.

But the airline has no plans to change its jet fuel hedging policy.

Air France-KLM is 59 percent hedged for 2018, according to first-quarter results, and analysts have highlighted that with it being less hedged than European rivals, its earnings are more vulnerable to rising oil prices.

That hedging rate of 59 percent for this year is up slightly compared with 55 percent at the end of last year’s first quarter.

Elbers said his focus remained on KLM after strikes and union unrest at French sister company Air France prompted the departure of group CEO Jean-Marc Janaillac last month. Elbers is one of three executives in charge while the Air France-KLM group seeks a new CEO.

Brexit remains a concern for KLM, however, with the Dutch serving 18 UK destinations from its Amsterdam hub, more than rival British Airways serves from London Heathrow.

“Brexit is creating some uncertainty economically and that could affect our business,” he said. (Reporting by Victoria Bryan, editing by G Crosse)

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