Air France-KLM Cargo reports another operating loss
29 / 10 / 2015
Air France-KLM saw operating profits at its cargo division remain in the red during the third quarter of the year but said it hopes its freighters business will be breakeven in 2017.
The Franco-Dutch airline group recorded a third-quarter operating loss of €81m, an improvement on the €102m loss it recorded for the same period last year.
For the first nine months losses now amount to €222m, against €181m during the same period last year.
Traffic during the third quarter decreased by 4.5% year on year to 2.3bn cargo revenue tonne km as it cut freighter capacity as part of a re-organisation.
Meanwhile, overall cargo capacity was down 2.4% on a year earlier as a result of the freighter reduction.
Within the framework of its Perform 2020 reorganisation programme, three Boeing 747s were retired in the winter 2014-15 season, while all its MD11s will be retired by June 2016.
The group plans to operate only 5 freighters by the end of 2016.
“This reduction should enable the full -freighter business to return to operating breakeven in 2017,” it said.
During the third quarter freighter capacity was reduced by 30%, while belly capacity was stable.
Supply and demand figures were also skewed by a strike that took place during the period in 2014.
With demand and capacity down, the airline group saw its cargo load factor for the third quarter slide to 58.5% from 59.8% a year earlier.
Meanwhile, third-quarter cargo unit costs were down by 11.6% year-on-year as a result of the lower fuel price.
It was better news at the overall airline group which saw third-quarter revenues increase year on year by 10.8% to €7.4bn, while net profits leapt by 394% on a year earlier to €480m.
Last year’s results were affected by the strike, while this year the airline also benefitted from lower fuel prices.
The improved performance follows violent scenes at the company’s headquarters in October when workers protested against mass job cuts.
Following the protests, Air France scaled back its job cut plans from 2,900 to fewer than 1,000, but when announcing its improved third-quarter results warned cuts were still required.
Air France-KLM chair of board of directors Alexandre de Juniac said: “A favourable environment, principally characterised by lower fuel prices and strong demand over the summer, resulted in an improvement of Air France-KLM’s results during the third quarter.
“Such circumstances came in addition to the positive effects of the Transform 2015 plan implemented since 2012.
“This improvement is however not sufficient to bridge the competitiveness gap with our competitors or to generate the financial resources required to finance the Group’s growth.
“The implementation of the Perform 2020 plan is therefore vital since unit cost reduction is Air France-KLM’s main lever enabling the Group to return to a profitable growth path in a highly competitive environment.
“The management invites union representatives to resume negotiations as soon as possible as they are crucial for the success of this plan.”