This article from NYTimes.com has been sent to you by psa188@juno.com. I hope Erik Hoovervitz doesn't lose his job and ramp access. psa188@juno.com KLM Shifts Its Outlook and Now Sees a Weak Year January 7, 2003 By GREGORY CROUCH NIJMEGEN, the Netherlands, Jan. 6 - The Dutch airline KLM rerouted investor expectations today, warning that it will probably lose money on operations again this year because of soaring oil prices, spreading political turmoil and a weak world economy. Investors were surprised by the gloomy news, and responded by bidding KLM's stock down by nearly 10 percent in Amsterdam. It later recovered and closed down 6.6 percent. "We were all being too bullish," said Andrew D. Lobbenberg, an analyst at ABN Amro Securities in London. As recently as October, when KLM announced generally positive results for its fiscal second quarter, the company was forecasting a profit for the full fiscal year, which ends March 31. But today, KLM said passenger traffic was lower than expected in the latest quarter and jet fuel prices were rising. "What is really worrying is the political unrest in some regions, particularly the Middle East and South America, especially Venezuela," said Bart Koster, a KLM spokesman. Beyond those problems, KLM said it was concerned about a falloff in first-class and business travel, which is cutting into profits and forcing many European airlines to rethink the way they do business. Lufthansa of Germany recently decided to scrap first-class service on some intercontinental flights because of weak demand, and SAS, the Scandinavian carrier, has said it plans coach-only flights to some popular vacation spots. Today, British Airways said that fewer premium-fare customers flew with it in December 2002 than in December 2001, after the Sept. 11 attacks. "That shows that business-class travelers aren't in the planes," said Geert-Jan Hoppers of SNS Securities in Amsterdam. Mr. Koster of KLM said his airline was studying how to compensate for the decline in first-class passengers. Announcements of cost-cutting measures are expected to accompany the airline's third-quarter results later this month. "More travel managers from big companies are ordering their staff to fly economy," Mr. Koster said. "We think that is a trend that is not going to reverse itself completely, even when the economy picks up again." Other airline stocks also sank after KLM's warning today, including Lufthansa, which closed down 3.1 percent. British Airways and Lufthansa still expect to turn operating profits in the current year, but Lufthansa warned about the consequences of a "stagnating economy, political instability and a decline in business." http://www.nytimes.com/2003/01/07/business/worldbusiness/07DUTC.html?ex=1042949637&ei=1&en=f1d7869e34eea560 HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@nytimes.com or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@nytimes.com. Copyright 2002 The New York Times Company