Air France-KLM has posted a huge EUR809 million (US$1.06 billion) net loss for the full-year 2011.
The result marks a significant reversal in fortunes for the group, which achieved a EUR289 million net profit in 2010. While group-wide revenues increased 4.5% year-on-year to EUR24.36 billion, the company’s operating costs rose 6.2% to EUR24.72 billion. This included a 16.3% jump in fuel costs, which totaled EUR6.44 billion for the year.
“2011 was a tough year for the group, due to the uncertain operating environment and the high fuel price,” said Air France-KLM’s Chairman, Jean-Cyril Spinetta. “Elsewhere, the economics of certain countries where we have a strong commercial presence were affected by various crises, the consequences of which are still being felt.
“In this context, the success of the transformation plan presented on 11 January this year is all the more crucial. All the announced actions are already underway, and the immediate measures, notably the wage freeze in 2012 and 2013 are for the most part already in place. Our objective is a reduction of around 10% in ex-fuel unit costs. The management of Air France-KLM as well as those of Air France, KLM and all their teams are committed to the success of the plan,” he added.
In terms of operating performance, Air France-KLM fared well in 2011. The 6.9% rise in passenger traffic was based on a 6.6% expansion of available seat capacity. This pushed average cabin load factors up to a healthy 82.0% for the year. Total passenger revenue climbed 5.2% to EUR18.83 billion – 77.3% of the group’s total revenue.
Air France-KLM embarked on a major cost reduction plan in 2007. While unable to prevent the group slipping to an annual loss, the group noted that the plan had generated EUR2.9 billion in savings. More work is needed to get the group back on track however, and the new ‘Transform 2015’ cost-cutting strategy is already underway. This is aimed at cutting the group’s debt by EUR 2 billion and reducing operating costs by 10% by year-end 2014.
Air France-KLM noted however, that 2012 is expected to be another difficult year. The airline’s fuel bill is expected to increase by a further EUR1.1 billion compared to 2011. As a result it said that results for the first half of 2012 are likely to be worse than the same period last year, athough an upturn is expected in the second half.
