KLM sees no recovery after Q3 loss AMSTERDAM (Reuters) =97 Dutch airline KLM reported a third-quarter net loss= =20 on Thursday and said conditions would remain difficult as a worsening=20 economic situation and fears of war in the Middle East disrupts its recent= =20 recovery. Posting a 66 million euro ($70.66 million) net loss, a touch=20 slimmer than expected, Europe's fourth biggest airline reiterated it was=20 unlikely to swing to an operating profit for its fiscal year ending in=20 March. Airlines have been hit by economic slowdown and the impact on=20 traffic of the September 11, 2001 attacks on the United States. KLM said it= =20 would adjust capacity to cope with slower demand, which it expected to=20 continue in the current quarter. The Dutch carrier was flying some of=20 Europe's fullest planes for most of last year, but earlier this month said= =20 traffic volumes and fare yields had been hurt by the economic downturn and= =20 tensions in Iraq, which also pushed oil prices to record highs, raising= costs. "In the third quarter we experienced a declining trend in demand which has= =20 put pressure on our traffic and yields," KLM Chief Executive Leo van Wijk=20 said in a statement. "As we expect this pressure to continue in the last=20 quarter of our fiscal year, we are adjusting our capacity and network plans= =20 for the remainder of the fiscal year as well as for the summer of 2003, and= =20 further increase our focus on cost management," he said. Analysts polled by= =20 Reuters had expected a net loss, excluding exceptional items, of 72.9=20 million euros, some 19 million less than a year ago, with predictions=20 ranging from 111 million to 36 million euros. The news knocked KLM shares down moderately and by 1029 GMT were 1.31=20 percent lower at 8.29 euros. The stock has lost a third of its value in the= =20 last three months, currently valuing the group at about 400 million euros.= =20 "It's clear that yields are under severe pressure," said Geert-Jan Hoppers,= =20 analyst at SNS Securities in Amsterdam. "KLM and other airlines have added= =20 capacity last year but demand has remained sluggish, forcing them to keep=20 prices low. And business passengers are not coming back." The operating=20 loss in the third quarter was 63 million euros, versus analysts' forecasts= =20 of 72.9 million, on operating revenues of 1.58 billion euros. While the=20 results were better than a year ago, this was mostly because KLM's usually= =20 weak third quarter was ravaged in 2001 by the fallout of the attacks in the= =20 United States. ALITALIA ALIMONY KLM was also hit in late 2002 by a 250 million-euro fine stemming from its= =20 painful divorce from former partner Alitalia of Italy. KLM said it would=20 take a maximum charge of 180 million euros related to the penalty in the=20 fourth quarter. Chief Financial Officer Rob Ruijter told a conference call= =20 KLM was trying to find means other than cash to settle the fine but was not= =20 planning a capital increase. The options included a barter of services,=20 conversion of the penalty into a loan or "equity-type instrument," he said. The issue is a sensitive one for Alitalia because KLM is currently=20 considering whether to join the SkyTeam marketing alliance, which includes= =20 Alitalia and Air France, or oneworld, whose members include British Airways= =20 and American Airlines. Ruijter said talks with SkyTeam had recently=20 intensified, but said discussions with oneworld were also ongoing and gave= =20 no timing for the final alliance decision. The discussions have been=20 complicated by the uncertainty behind the largest-ever U.S. airline=20 marketing alliance between KLM's partner Northwest, Delta and Continental. FUEL SURPRISE A positive surprise in KLM's results was fuel costs, which KLM said=20 remained flat year-on-year as the weaker dollar neutralised rocketing oil=20 prices. The airline, which hedges about two-thirds of its anticipated fuel= =20 consumption, cited rising fuel costs as one of the reasons for its profit=20 warning earlier in the month. On the negative front, KLM said growth in=20 passenger numbers at its closely watched low-cost buzz unit was=20 disappointing, in large part due to strong competitors such as Ryanair,=20 especially in the key German market. KLM has been seeking a partner to=20 share the risky buzz venture and CFO Ruijter said the Dutch group might=20 sell a majority stake in the no-frills unit and did not rule out selling it= =20 outright. *************************************************** The owner of Roger's Trinbago Site/TnTisland.com Roj (Roger James) escape email mailto:ejames@escape.ca Trinbago site: www.tntisland.com Carib Brass Ctn site www.tntisland.com/caribbeanbrassconnection/ Steel Expressions www.mts.net/~ejames/se/ Site of the Week: www.pichemas.com TnT Webdirectory: http://search.co.tt *********************************************************