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Travel industry news

03 May 2019

BY James Chapple


Air France-KLM posts huge loss following ‘challenging’ first quarter

Air France-KLM has cited rising fuel costs and tough competition on price after its first quarter (Q1) loss more than doubled.

Air France.jpg

Air France-KLM posts huge loss following ‘challenging’ first quarter

The carrier posted a Q1 operating loss on Friday (3 May) of €303 million, down a further €185 million on Q1 2018. Its shares fell 3% during early trading.

Unit revenue, meanwhile, fell 1.9%, the carrier said, due to a late Easter and substantial winter capacity growth throughout the industry.

And while unit costs decreased 0.4% at constant currency and fuel, this was “more than offset by unit revenue, fuel bill and currency headwinds” said the carrier.

Passenger numbers grew 3% on a load factor down 0.3 percentage points, while group net debt declined €403 million to €5.8 billion.

Group chief executive Benjamin Smith said: “As anticipated, the first quarter has been challenging for the European airline industry, including the Air France-KLM Group.

“Substantial industry capacity growth in the off-peak business period led to unit revenue pressure. In this context, the group achieved further improvement in unit cost while reaping the benefits of its efforts to strengthen its positioning.

“These elements, together with a more benign industry supply outlook for the summer, lead us to expect improving trends in the rest of the year and to confirm our full-year guidance.”

Air France-KLM will reduce proposed 2019 capacity growth by 1% from 3% growth to 2% on account of the “uncertain geopolitical environment” and “fuel price trends”.

However, its Dutch low-cost subsidiary Transavia will continue to pursue passenger capacity growth of 9% to 11%, the group confirmed.

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