Air France KLM sinks to €1.56 billion fiscal-year loss

Air France KLM Group reported a heavy net loss of €1.56 billion ($1.93 billion) for its fiscal year ended March 31, nearly double its €814 million deficit in the prior year, but management reiterated that it believes a breakeven operating result is possible in the current financial year excluding the impact of pre-2009 fuel hedges and subject to costs related to the closure of European airspace owing to volcanic ash.

The group estimates that the Icelandic volcano-related disruptions April 15-21 caused €260 million in lost revenue with a €160 million impact on its operating result.

CEO Pierre-Henri Gourgeon said, "2009-10 will go on record as our 'annus horribilis.' The global economic crisis had a profound effect on the entire airline industry. In addition, Air France KLM had to contend with the tragedy" of the A330-200that crashed last May 31, killing 228 (ATWOnline, May 7). Results for FY2009-10 include a negative impact of €637 million linked to pre-2009 fuel hedges.

Revenue fell 15% year-over-year to €20.99 billion including a 13.6% decline in passenger revenue to €16.27 billion. Total operating expenses dropped 14.8% to €13.24 billion. Operating loss deepened to €1.28 billion from €186 million in the prior year.

Passengers carried dipped 4.1% to 71.4 million and RPKs fell 3.2% to 202.5 billion on a 4.3% cut in capacity to 251.1 billion ASKs. Passenger load factor improved 1 point to 80.7%. Yield was down 10.8% on the previous year to €0.0765 and RASK decreased 9.7% to €0.0615. CASK slid 4.6% to €0.0646.

For the fiscal year's fourth quarter ended March 31, AF KLM posted a €691 million net loss, up 44.3% from a €479 million deficit in the year-ago period. Quarterly revenue slipped just 0.8% year-over-year to €5.02 billion as both passenger and cargo demand picked up and restructuring of the cargo business launched in the previous quarter started to bear fruit. Unit revenue was up 2.7% per ASK and 30.9% per ATK.

Operating costs dipped 1.4% to €5.52 billion and 4.1% excluding fuel, reducing operating loss for the quarter 7.1% to €497 million, of which €381 million was attributed to passenger activity. Excluding the negative impact of fuel hedges, operating loss would have been €324 million. 

The company is in negotiations with the relevant authorities concerning the eventual level of compensation for the volcano disruptions, Gourgeon said, noting that AF KLM also is "actively working with the authorities to define a comprehensive and pragmatic approach to the volcanic ash risk so as to avoid the repetition of unnecessary flight operation stoppages in the future."