Air France KLM's cargo business records 2016 operating loss

16 / 02 / 2017

The Air France KLM Group saw its cargo division record another operating loss last year, although there was a slight improvement as headcount was reduced and freighters were taken out of action.

The Franco-Dutch airline recorded a full-year operating loss of €244m, compared with a €245m loss in 2015.

Cargo revenues for the year declined by 14.7% year on year to €2.1bn as a result of “structural industry overcapacity” and a 6.3% decline in traffic to 8.4bn revenue tonne km (RTK).

Its full-freighter operating loss for the year was €28m, compared with a €42m loss in 2015.

The cargo load factor for the year was 59.3% compared with 60.4% in 2015 as traffic declined faster than capacity.

The company said that the cargo division’s restructuring was “on track” and said that its operating result improved by €17m on a like-for-like basis.

“The group continued to restructure its cargo activity resulting in its gradual turnaround, in order to address the weak global trade and structural industry overcapacity, and to maximise its contribution to the group,” the company said.

“During full year 2016, full-freighter capacity was reduced by 24% with a reduction of the number of full-freighters in operation to six, leading to a 4.6% decrease in total cargo capacity measured in available tonne kms (ATK).”

It said unit costs – excluding fuel – were down by 2.6% compared with the previous year, mainly driven by a 6.7% reduction in headcount.

Air France KLM also announced that the cargo division would no longer report its results separately to the passenger business.

“It has been decided to change the cargo reporting as per fiscal year 2017 based on contribution margin and to include it in the passenger network results,” the company said. “This change will be effective as from the first quarter 2017 results presentation.”

Looking at fourth quarter results, revenues declined by 10.8% year on year to €546m and its operating loss sank to €28m from a loss of €23m during the fourth quarter of last year.

Fourth quarter traffic was down 3.9% year on year to 2.2bn RTK. The average cargo load factor for the 2016 period stood at 63.2%, which was the same level as a year earlier.