SWORDS-BASED airline CityJet made an operating loss of €55.4 million in the 12 months to the end of March 2009 in spite of recording a 5 per cent increase in passenger traffic.

CityJet said the loss was the result of a sharp fall-off in business customers and increased passenger charges at London City Airport, its main hub.

The Irish airline, which is a subsidiary of Air France-KLM, said its average fare out of London City Airport, which is close to the financial district, fell by 18 per cent last year.

This is a reflection of a sharp reduction in business class travel last year. Overall, the airline carried more than 2 million passengers.

CityJet’s turnover fell by 4.1 per cent to €281.5 million last year. Its cost of sales was €293 million, which left it with a gross loss of €12.5 million.

This swelled to €55.4 million at an operating level when distribution and administrative expenses were added.

In addition to this, CityJet wrote off €4.2 million from the value of its landing and takeoff slots at London City Airport and incurred interest costs of €4.8 million.

This brought the airline’s total loss for the year to €64.3 million.

CityJet closed the year with net assets of €158 million while it owed €129.5 million to Air France at the end of March 2009.

In a statement CityJet chief executive Geoffrey O’Byrne White said a “return to profitability is likely to depend on economic recovery”. He said the airline was “cutting costs while continuing to develop a platform for future growth”.

CityJet has also embarked on a marketing campaign in the UK to drive business. He said cost synergies have been achieved from its merger in the past year with Belgian airline VLM, which recorded a loss of €12.3 million last year.