AIR FRANCE-KLM group, Europe’s biggest airline, reported a full-year loss as a sluggish economy and high fuel costs crimped earnings and said results for the current six months will show a further deterioration.
The Paris-based company had a net loss of €809 million versus a pro-forma €289 million profit in 2010, it said.
Jean-Cyril Spinetta, recalled last year as chief executive officer as slumping profit forced Pierre-Henri Gourgeon’s exit, froze pay and hiring in January and is in talks with unions over a €2 billion annual saving he says is needed to secure the long-term future.
The loss comes after German rival Deutsche Lufthansa AG yesterday posted a €13 million annual deficit as its soon to be sold UK division BMI clipped earnings.
“2011 was a tough year due to the uncertain operating environment and high fuel price,” Mr Spinetta told journalists. “In this context the success of the transformation plan is all the more crucial. The announced measures are already under way.”
Initial talks with unions will end this month, with details to be hammered out in the second quarter so that a deal providing a 20 per cent efficiency gain at Air France by 2014 and stable payroll costs at KLM should be in place by the end of June, the chief executive said in Paris.
Alexandre de Juniac, head of the French unit, said it was too early to speak of job cuts.
Kerosene costs were €904 million higher in 2011 and will rise by a further €1.1 billion this year, the carrier said. Air France-KLM traded 2 per cent higher at €4.27 in Paris after earlier falling as much as 2.9 per cent.
While the shares have gained 8 per cent in 2012, giving a value of €1.28 billion, they’re down 63 per cent over the past 12 months.
That’s twice the decline at competitors Lufthansa and IAG. Even as revenue at the carrier, which switched to calendar-year reporting, increased 4.5 per cent to €24.4 billion and traffic gained 6.6 per cent, unit revenues at the passenger business slid 1.2 per cent, suggesting a slide in ticket prices.
Chief financial officer Philippe Calavia said the main target was to stabilise its net debt. There were no immediate plans to take a bigger holding in Alitalia SpA, he added. – (Bloomberg)