Itโs been a tough winter period for some of Europeโs biggest airline groups, with extra seats flooding into market causing problems in the seasonally weak first quarter of the year.
Air France-KLM saw its net loss widen 20 percent to $357 million (โฌ320 million) for the quarter until the end of March, a similar story to what happened at Lufthansa and Finnair.
Revenue increased 3.1 percent to $6.7 billion (โฌ6 billion), but costs also rose with the fuel bill up 13.2 percent to $1.3 billion (โฌ1.2 billion).
โAs anticipated, the first quarter has been challenging for the European airline industry including the Air France-KLM Group, as substantial industry capacity growth in the off-peak business period led to unit revenue pressure,โ said CEO Benjamin Smith.
Like its rival airlines, Air France-KLM will be hoping that it can turn things around in the spring and summer quarters to come, and Smith expects a more โbenign industry supply outlook for the summer.โ
FRANCE VERSUS THE NETHERLANDS
Although the Dutch arm of the business continued to outperform the French side, the results were much closer as KLM actually experienced the greater drop in earnings. This was partly because Air France suffered from the impact of strikes across its network in the first quarter of 2018.
Air Franceโs operating loss increased 44 percent to $285 million (โฌ256 million) but KLMโs dropped $129 million (โฌ116 million), pushing it to a loss of $62 million (โฌ56 million).
Tensions between the two sides have continued to simmer in recent months after the Dutch government bought a 12.7 percent stake in the airline group, putting it almost on a par with the French government, which owns 14.3 percent.
The group will announce at its annual general meeting at the end of May whether the composition of the board will change following the stake acquisition.
โFor the day-to-day business of the company it doesnโt change a lot, the way we are working. I think that Ben Smith, Anne Rigail [Air France CEO], and Pieter Elbers [KLM CEO] are totally concentrated and focused to the management of the company and thatโs it,โ said Frรฉdรฉric Gagey, chief financial officer, on an earnings call on Friday.
JET AIRWAYS LOSS
In 2017, Air France-KLM and Jet Airways signed a โlandmark โEnhanced Cooperation Agreement,โ with the two sides hoping it would enhance โthe partnership built between the three airlines since 2014.โ
But with the Jet Airways fleet grounded pending a takeover, itโs โnot good newsโ for Air France-KLM.
Gagey estimated a one-off financial hit of between $11.2โ$16.7 million (โฌ10โโฌ15 million) and potentially around $22.3 million (โฌ20 million) per year and said that Air France-KLM would work to โfind another way to continue to increase our presence to the Indian market and also to offer to Indian passengers a good connection to the U.S.โ
Source: Skift.com
