Dutch carrier KLM, due soon to be taken over by Air France, reported a surprise third-quarter net profit today and raised its full-year forecast as deep cost cuts reaped rewards.
KLM made a net profit of €8 million in the third quarter to end-December -- much better than the average €13.2-million loss expected by analysts polled by Reuters and the €66 million loss made a year ago.
Europe's fourth-largest airline said that for the full year ending in March it expected the net result to be near break-even and the operating result to be "clearly positive".
KLM's shares rose 2.2 percent to €15.40 in early trade as investors cheered the outlook.
KLM, like most of its rivals, has been hurt by the worldwide economic slowdown and stiff competition from no-frills carriers. It expects its takeover by Air France to be completed in April, but has warned that its survival depends on reducing high overhead costs.
KLM is also betting on the takeover by larger Air France to cut costs even further. The combination announced in September, which will have a market value of €3.9 billion, would create the world's largest airline in revenue terms.
The two airlines are awaiting approvals of the deal from European and US regulators. But KLM shares have gained 25 per cent since the announcement of the takeover offer, which now values the Dutch airline at about €814 million.