Paris: Air France-KLM on Tuesday posted a net loss of €505 million ($687 million) in the January to March quarter and canceled its dividend as the recession caused a slump in business travel and its cargo business.
The net loss in the quarter, the company’s fiscal fourth, is modestly smaller than a €534 million minus a year earlier and led the company to the first full year net loss since the 2004 merger between Air France and Dutch KLM.
CEO Pierre-Henri Gourgeon told reporters in Paris that the company is being “extremely prudent,” despite some indications that the decline in air travel may be leveling off, and plans to keep cutting capacity, costs and staff.
“In the last six to eight weeks we have seen some stabilization of the crisis in both passenger and cargo, but we don’t see any signs of recovery,” he said.
For the full year that ended on 31 March, the company reported a smaller-than-expected operating loss — a measure of earnings from ongoing operations — of €129 million compared with a net profit of €1.4 billion a year earlier.
The group warned in March of a €200 million loss. Gourgeon said the company cut staff costs and expenses such as marketing more than anticipated.
Results were announced after the market closed. In Tuesday trading, shares rose 5.07% to €10.14.
The airline group didn’t give a financial outlook for the year ahead, saying the first half is “challenging” and visibility for the second half of the year is low.
Gourgeon said the group shed 2,700 jobs through attrition in its financial year, bringing the total number of employees to 107,000. He said he hoped to reduce the work force by the same amount this year.
The airline group also said it is reducing capacity by 4.5% in passenger travel and by 11% in cargo for its summer schedule.
It also plans to cut the number of planes on order. Gourgeon said the company plans to shave off 14 aircraft from the 203 total it had ordered for delivery by mid-2012. Those deferrals included around 10 long-range Boeing Co. 777 cargo planes and two Airbus A380s.
The airline group is reducing investment plans by €2.9 billion to €1.4 billion. These measures, combined with cost savings of €600 million, “should offset a significant proportion of the anticipated drop in revenues,” the company said.
Air France-KLM said is scrapping its dividend, blaming the “challenging environment.”
The company said its financial position is “robust” with €4.3 billion of cash and available credit lines of €1.2 billion.
For the full year, the net loss of €814 million compared with a profit of €756 million a year earlier. Revenue was 0.6% lower at €23.97 billion. That’s worse than analysts surveyed by Thomson Reuters forecast. They had tabled on a net loss of €480.11 million for the full year on sales of €24.23 billion.
In the fourth quarter, revenue dropped 12.2% to €5.01 billion.