Shutdowns Bring Economic Woe to Air France
May 21st, 2010
Air France-KLM has plunged even further into the red after what its chief executive called the “annus horribilis” of the past financial year.
“The global economic crisis had a profound effect on the entire airline industry,” said Pierre-Henri Gourgeon as Europe’s second-biggest airline by revenue reported a €1.56bn ($1.93bn) net loss for the year to the end of March, nearly double last year’s deficit.
Sales slumped 15 per cent to €21bn as passenger and freight demand fell during the economic downturn. The airline, which also took a hit of €637m from pre-2009 fuel hedges, reported that operating losses jumped to €1.3bn, from a loss of €186m in the previous year.
“2009-10 will go on record as our ‘annus horribilis’,” Mr Gourgeon said, adding that on top of the downturn, Air France had to deal with the crash into the Atlantic of one of its aircraft in June, which killed all 228 people on board.
The group, which registered a loss for the first time in more than a decade last year, said shareholders would not receive a dividend for a second year running.
Mr Gourgeon said efforts to control costs by cutting staff numbers and restore revenues by limiting capacity growth meant the group was sticking to its previous aim of an operating break-even for the current year, excluding the impact of pre-2009 fuel hedges.
However, he said this objective depended on the impact on the airline of the air-space closures that followed the April 14 eruption of Iceland’s Eyjafjallajökull volcano, which affected its operations for a week.
Air France estimates the shutdowns caused an estimated €260m in lost revenue, with a €160m impact on its operating result in the current financial year. Along with other airlines, it is in talks with authorities on compensation.
The economic downturn has produced grim results for airlines. Germany’s Lufthansa, Europe’s biggest airline by revenue, said in March it would not pay a dividend after reporting a €112m net loss for 2009, though it achieved a profit.
British Airways is expected to announce a pre-tax loss of close to £600m ($865m) on Friday, when it is due to report its full-year results, the first time it will have suffered two consecutive years of loss since privatisation in 1987.
Story from Financial Times
