Air France KLM fuel costs widen KLM 1Q loss

Air France KLM Group reported a first-quarter loss of €368 million ($481.3 million), widened from a €367 million loss in the year-ago period.

The Group said the results were largely in line with expectations, with the rise in fuel costs outstripping a 5.6% increase in passenger unit revenue. Ongoing weakness in the cargo sector, driven by the persistent weakness of international trade, also contributed to what the carrier described as “a tough quarter.”

Revenue for the quarter was up 6% to €5.6 billion from €5.3 billion in the year-ago period, while operating costs rose 9% (6% ex-fuel). Fuel costs increased €255 million, up 17.9%, to €1.68 billion for the quarter. Operating loss was €597 million, widened from €403 million in the year-ago quarter.

There was a 5.5% rise in passenger traffic for a 1.6% increase in capacity. Load factor was up 3.1 points to 81.6% and RASK improved 5.6%.

Passenger revenues rose 8.8% to €4.43 billion. However, first-quarter operating losses in the passenger business climbed to €504 million from €367 million year-over-year, largely due to a €224 million increase in the fuel bill.

Cargo traffic fell 6.1% despite a 2% drop in capacity, leading to a 2.9 point decline in load factor to 64.9%. Cargo revenue was down 3.3% to €744 million, resulting in an operating loss of €68 million, compared to €9 million in the year-ago quarter.

“The results of the first quarter led the Group to maintain its expectations for full year 2012 … and a maximum level of net debt of €6.5 billion at year end,” the Group said in a statement. It cautioned, however, that “the economic environment continues to be uncertain” and “the annual fuel bill is expected to increase by €1.1 billion.”

First-half operating loss is expected to be worse than the €548 million loss in the year-ago period. However, in the second half the Group expects to start seeing benefits of the first phase of the Transform 2015 initiative, which aims to cut controllable costs by 20% and shave €2 billion off Group debt by the end of 2014.

Article Source : ATW Daily News