Air France-KLM on Thursday reported a bigger-than-expected drop in its quarterly operating result and warned that this year's costs would be higher than previously projected. The French-Dutch airline group's shares fell 11% and could see their biggest daily drop in over two years if the losses persist. It expects its unit cost - the average cost of flying an aircraft seat one mile - to grow by around 3% in 2024, instead of the previously forecast 2%, after it rose 3.4% in the third quarter and with worsened expectations for the fourth. "This is mainly related to higher staff and maintenance cost at KLM and lower capacity planned," Bernstein analysts said in a note. The group's Dutch arm in October said it would cut costs and postpone investments to lift profits, as the industry faces rising equipment costs, staff shortages and higher airport fees. "At KLM, persistent cost challenges spiked higher than anticipated, putting pressure on parts of its business model and reinforcing the need for more concrete structural improvements," group CEO Benjamin Smith said in a statement. Amsterdam's Schiphol airport will increase its fees for airlines by 41% from April 2025, which KLM estimated would lead to an operating profit impact of E65-110m next year. Air France-KLM also said that France's proposed hike of the solidarity tax on flight tickets could hit its operating result by E90-170m in 2025. "Direct consequence could be higher fares which could make air travel less accessible to customers in our own market," Smith said at a press conference.<br/>
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Taiwan's China Airlines is nearing a decision to split a multi-billion-dollar order for long-distance passenger jets between Airbus and Boeing, while an order for freighters hangs in the balance, industry sources told Reuters. The decision will come as the United States' presidential election ended with the Republican Donald Trump sweeping back into office, and Taiwan keen to ensure the new U.S. government understands Taipei's desire to ensure strong relations continue. Taiwan's largest carrier has been weighing Boeing's 777X and the Airbus A350-1000 as replacements for its fleet of 10 Boeing 777-300ERs and to provide capacity for future growth. The sources said China Airlines could order as many as 20 passenger jets to be split roughly equally between the two plane giants, while the choice of freighters was at least partly being weighed against the backdrop of U.S. presidential elections. Such a deal for the passenger jets would be worth almost $4b after typical industry discounts, according to estimated delivery prices from aviation consultancy Cirium Ascend.A final decision depends on the airline's board and there is no guarantee at present about the numbers and types of planes in any formal deal, the sources said. China Airlines ordered 16 Boeing 787-9s in 2022 to replace its ageing fleet of Airbus A330s. China Airlines told Reuters that it plans its fleet "based on market demand and corporate developments, and carefully studies the relevant technical and commercial conditions to select the most appropriate aircraft type".<br/>
Donald Trump's victory in the U.S. presidential elections come as a boon to Korean Air, as the flag carrier will be able to absorb more demand from American and Chinese passengers amid possibly heightened political friction between the world's top two economies, analysts said Thursday. The analysts cite a sharp decline in direct flights between the United States and China. Airlines from both countries were allowed to operate more than 150 flights each week before the outbreak of the COVID-19 pandemic. The figure has decreased to a mere 50 for now, as the two countries show no signs of thawing their icy bilateral relations. Korean Air will benefit the most among local airlines here, as more passengers for routes between the two countries are expected to take a transfer flight using the Korean flag carrier, market analysts said. "Korean Air will benefit from the prolonged supply limit for routes between the U.S. and China," Lee Jae-hyuk, an analyst at LS Securities, said.<br/>