Air France KLM Group reported a net loss for its shortened nine-month 2011 financial year of €442 million ($580.5 million), reversed from a net profit €980 million in the year ago-period.
Air France A320. By Rob Finlayson
Air France KLM Group reported a net loss for its shortened nine-month 2011 financial year of €442 million ($580.5 million), reversed from a net profit €980 million in the year ago-period. The operating result was positive, but the reported €50 million operating profit was sharply down from the €525 million operating profit in the year-ago period.
On a pro forma basis for the full year, Jan. 1 through Dec. 2011, results were worse with net loss coming in at €809 million versus a pro forma €289 million profit in 2010.
Group chairman Jean-Cyril Spinetta described 2011 as “a tough year for the group, due to the uncertain operating environment and the high fuel price.” He stressed that in “in this context, the success of the transformation plan presented on Jan. 11 this year is all the more crucial. All the announced actions are already underway.”
The group’s three-year (2012-2014) Transform 2015 plan aims to bring the company back to profitability and builds on three priorities: restoring competitiveness through cost-cutting; restructuring the short- and medium-haul operations; and rapidly reducing debt by €2 billion to €4.5 billion by the end of 2014 (ATW Daily News, Jan. 13). The plan was initially outlined in November (ATW Daily News, Nov. 11, 2011).
The restructuring plan targets a 10% reduction in unit cost ex-fuel and a return to breakeven of its loss-making medium-haul operations by 2014. The group’s medium-haul network reported a €700 million operating loss in 2011.
Full-year pro forma revenue rose 4.5% to €24.36 billion and operating expenses rose 6.2% to €24.72 billion, mainly due to a 16.3% hike in fuel costs to €6.44 billion. Operating loss for the full year was €353 million compared to a profit of €28 million in 2010, including a €202 million operating loss incurred in the fourth quarter. This compares to an €81 million operating profit in the last three months of 2010.
The group gave a rather bleak outlook for the current year and said it expects first-half operating results “will be below that of the previous year [€548 million loss]. However, the second half should benefit from the first effects of the three-year [restructuring] plan,” it said.