Quick Win by the Algorithm: Air France-KLM Rise in Airline Industry

Quick Win by the Algorithm

On March 1, 2017, the I Know First algorithm issued a bullish forecast for Air France-KLM. (AF.PA). AF.PA had a signal of 158.29 and a predictability of 0.21. As a result, in accordance with the forecast, the company’s stock increased by 54.23% in just 3 months, showing a quick win by the algorithm.

Quick Win

Air France-KLM (AFK) is one of the largest airlines in the world ranked by revenue. It also undertakes MRO (Maintenance, Repair & Operation) and cargo. 

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AF. PA jumped from less than $7 per share on March 1st to over $10.3 on June 1st, generating an approximately 50% return over the three-month holding period.

There are several dynamics behind this surge:

  1. Strategic projects. In November, 2016, AFK announced the launch of Trust Together project, which targeted at costs reduction, service improvement, and creation of a new long haul airline. In addition to that, the company announced the plan to implement Boost project in winter 2017, aiming at cutting the costs up to 18%.
  2. Unexpected financial condition improvement. The company traditionally operated with high level of leverage. However, it started to reduce the debt level, which had a positive impact on valuation of the company. Furthermore, it also reported a higher than expected profit level, mainly contributed to lower fuel and non-fuel costs.
  3. Labor relationship. The company actively engaged in reaching agreement with the staff. There was a positive outlook for AFK to settle with the pilots, solving the long-existing problem with labor.
  4. Other. Continued partnership development benefited the group in bolstering its presence in myriad regions. Tourism was recovering after the terrorist attack. They all strengthen our faith in the company’s future growth.

This bullish forecast on AF. PA was sent to current I Know First subscribers on June 4, 2017. 

Before making any trading decisions, consult the latest forecast as the algorithm updates predictions daily. You can use the algorithm for intra-day trading. The predictability tends to become stronger with forecasts over longer time-horizons such as the 1-month, 3-month and 1-year forecasts.