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Business climate remains “tough” for Air France-KLM

PARIS/AMSTERDAM: The Air France-KLM Group has reported an adjusted net loss of 485 million for Q1 2014, down from 652 million in the same period last year.

Allowing for currency fluctuation, group revenue was unchanged at 5.55 billion but the net debt rose 190 million to 5.5 billion during the quarter.

AF-KL-MPCargo revenues totaled 676 million euros, down 3.4 percent and by 1.3 percent on a constant currency basis. The overall load factor increased to 64.8 percent as traffic rose 1.9 percent and capacity fell 0.9 percent.

The airline group echoed the general industry experience of continuing weak yields as revenue FTKs fell one percent. A reduction of 3.7 percent in costs reduced the operating loss for the period from 50 million to 34 million.

AF-KL says a cargo turnaround continues to take longer than expected and "further scenarios are now under consideration to restructure the full freighter business in order to accelerate the turnaround." A report is expected to be completed in "June or July" according to cargo head Eric Varnwijk who says all the options are being considered - including exiting the full-freighter business or retaining some aircraft.

The group says that while its Transform 2015 plan remains on track, the general operating environment remains "tough" as it tries to achieve a 2.5 billion EBITDA by the end of this year.

On an individual airline basis, Air France reported revenues of 3.56 billion for the quarter – down from 3.64 billion for the same period last year. The operating result saw a fall in the net loss from 370 million to 279 million. KLM's Q1 revenue declined from 2.12 billion to 2.08 billion and the loss increased from 163 million to 174 million year-on-year.

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