Losses pile up for Air France-KLM

Less freight and high fuel costs have damaged the performance of Air France- KLM.

Air France-KLM reported a net loss of $483 million during the first quarter of 2012, holding accountable the high fuel costs and reduction in the air cargo demand in what they called “a tough quarter”.

The group, which includes Martinair, stated that while passenger traffic had grown, its cargo business continued to be affected by the slowdown in economic activity.

Traffic, measured in revenue-ton-kilometers, fell by 6.1%, while capacity was reduced just 2%, leading to a 2.9 point decline in load factor to 64.9%.

Unit revenue per available ton kilometer declined 2.6%.

Cargo revenue totaled 744 million Euros (a fall of 3.3% on the first quarter of 2011) and the operating result showed a loss of 68 million Euros, compared with 9 million Euros last year.

The carriers said a high payroll also cut into profits, and the group was “being squeezed from both ends”, cost increases while demand for air cargo services drops.

Last year, Air France-KLM unveiled a plan to reduce costs, other than fuel, by 10% to reduce its debt. It also includes negotiating new employee contracts.

The carrier said it expected the turnaround plan would deliver positive results by the second half of the year.