Air France-KLM still struggling

Financial woes continued for one of Europe’s largest legacy carriers, as Air France-KLM reported an operating loss of US$124.6 million in its cargo business, which although bleak, was better than the $156.9 million the carrier lost in the third quarter of 2014.

Cargo volume in Q3 2015 came in at 301,000 tonnes, a little lower than last year’s 312,000 tonnes. The group continued to restructure its full-freighter activity to address weak global trade and overcapacity in the air cargo market. Main-deck capacity was reduced by 30 percent, year-over-year, while belly capacity was stable at a positive 0.2 percent, which was adjusted for the Air France pilot’s strike in September of 2014.

The carrier stressed that the third quarter year-over-year comparison was strongly affected by the pilot’s strike. The strike also had an impact on fourth quarter 2014 revenues of an estimated $146 million impact on revenue and operating results. EBITDA (earnings before interest, taxes, depreciation and amortization) for the cargo business in Q3 2015 were negative $116.9 million, compared to negative $112.3 million in 2014, but up $18.5 million, like-for-like. In the first nine months of 2015, cargo EBITDA was negative $313.8 million this year as compared to negative $184.6 million in 2014.

Overall revenue for the group in the third quarter this year of $11.4 billion was up 4.2 percent, excluding the strike impact, but down 2.4 percent, like-for-like. Earnings before interest, taxes, depreciation, amortization and restructuring (EBITDAR) for the quarter was $4.09 billion, an improvement of $597 million, like-for-like. The chairman of Air France-KLM’s board of directors, Alexandre de Juniac, said that the groups’ Perform 2020 reorganization plan will be vital to the carrier’s eventual turnaround, since unit-cost reduction is AF-KLM’s “main lever enabling the group to return to a profitable growth path in a highly competitive environment.”